Tony Lloyd: What plans she has to reduce the availability of illegal firearms in inner city areas.

Jacqui Smith: The day of action is part of an ongoing programme of work in which police forces, particularly in areas that face the majority of gun crime, are involved all the time. It was followed up in some areas by a week of action and in others by a month of action. That work certainly focuses activity, and it will continue.

Keith Vaz: While of course accepting the beneficial aspects of the DNA database, it is now the largest of any country in the world. It is estimated that there are 500,000 mistakes connected with the database. Can the Minister assure the House that that will be dealt with, and that the information contained on the database is protected from any unfortunate loss?

Meg Hillier: Security is of course an important issue. The National Policing Improvement Agency, which is responsible as the custodian of the DNA database, is also responsible for other key national databases and has a good track record. My right hon. Friend mentions replication, which is currently at 13.3 per cent. but going down. That is partly because in the early days of new DNA testing police forces took extra samples to meet higher evidential standards. Much work has gone on to educate police forces in taking DNA samples, so that replication is being reduced. However, that does not adversely affect any of the individuals involved.

Meg Hillier: This is an ongoing police investigation and it would be inappropriate for me to talk about any partial findings while that investigation, which is an operational matter, is going on. It would be wrong to identify or alert any of the individuals suspected, as it might give them the chance to go undercover. My right hon. Friend the Home Secretary made a commitment to this House to report back when we have all the information after a full, thorough investigation by the police.

Tony McNulty: The Government have received representations on part 6 of the Counter-Terrorism Bill from four non-governmental organisations—Inquest, Liberty, Justice and Amnesty International—three trade organisations and a small number of private individuals, including one submission entitled "Fascism — the UK Government wants to change the law on inquest. Will this give the freemasons a licence to kill?"

Tony McNulty: I agree with the second part of the hon. Gentleman's question. The whole House agrees that there is a need for substantial reform of the coroners system, which is forthcoming. But to alleviate and obviate at least some of the delays that he talks about, which I have huge sympathy with, it is important to include the provision in question at this stage. The hon. Gentleman will be on the Committee considering the Bill, and as I indicated on Second Reading, I am open to exploring how we can resolve a problem that everyone is aware of—the use of sensitive and secure material in such cases—to ensure that the system works well and is expeditious, so that people are not left in the sort of limbo he describes. Let us talk about that in Committee.

Laurence Robertson: I am grateful for the Minister's answer and his earlier contact. However, he knows that I—and perhaps other colleagues—have several cases that take considerably longer to determine. One problem appears to be the delay in allocating case workers to each application. Some applications will be refused, and people will have to go back to their countries, but at least that is a decision, and they can get on with their lives. However, it is often difficult for people who are waiting to start educational courses or who wish to visit their country and then return here. I had a constituent whose mother was dying in hospital abroad and, because of delays, she could not visit, and her mother died. Will the Minister do what he can to speed up the process? Some results will be negative but that is better than the delays that currently occur.

Liam Byrne: I am grateful to the hon. Gentleman for not only his question but the conversation earlier today. I hope that we can resolve quickly the cases that are on the table. Approximately two thirds of applications for indefinite leave to remain are resolved within 20 days and nearly 90 per cent. are resolved in 70 days. However, many cases are outside that target, and the UK Border Agency needs to work faster to get them resolved quickly. Many of the lessons that we drew from creating fast-track asylum teams around the country are being applied to those cases. I therefore hope that faster progress will be made on that front in 2008.

Liam Byrne: I am grateful for my right hon. Friend for those remarks. Trevor Phillips was right to say yesterday that there is a type of talent around the world from which the UK would benefit in the right circumstances. A little later this week, we have our first debate in Government time on the points system. It is important because it precedes the publication on the way in which we believe that the key stage of the points system will work. We will publish that policy after purdah. There will be a chance for hon. Members of all parties to put their views on the record before we finalise it.

John Gummer: If it is going as well as that, when will the Minister do something about the four months that it has taken to right a wrong—the wrong declared by an appeal judge —done to my constituent, Mrs. Massiah Stockings? When will he ensure that the wife of a serving officer in Helmand province will be given leave to remain in this country, not told that she has to send his passport in? When will he ensure that a man who is British by both parents can get a passport and not be asked impudent questions by his officials about why he cannot produce his parents' divorce document from some 40 years ago?

Madeleine Moon: A draft research proposal using the inelegantly detailed PEACE process—I am told that it stands for "Planning and Preparation; Engage and Explain; Account, Clarification and Challenge; Closure; Evaluation" and uses interpreters for interviews with non-English-speaking suspects—has been put forward by Kerry Marlow, one of my constituents, and his research group. Is that not a prime example of the police taking forward research that they need to improve working practices that the Home Office should be considering?

Jacqui Smith: I cannot claim already to have looked at that piece of research, but now that my hon. Friend has brought it to my attention and identified it as something that the local police are keen to research, I am sure that we will take a closer look at it.

Damian Green: While the Home Secretary is pondering the merits of evidence-based policies, perhaps she will take into account the evidence of the House of Lords Economic Affairs Committee on her immigration policy. The Committee includes former Labour Ministers, a distinguished economist—Professor Richard Layard—and the Government's own pensions adviser, Adair Turner. That Committee concludes that the Home Secretary's main defence for her policy, namely that it increases gross domestic product, is, in the Committee's words, "irrelevant" and "misleading". Why should anyone believe the Home Secretary's evidence rather than that of a cross-party Committee of people who actually know what they are talking about?

Meg Hillier: We continue to look into the issues of international identity fraud and will continue to do so in order to ensure that we protect the British public to the best of our ability. It is worth stressing, however, that preventing identity fraud is not a matter only for the Government, so I would urge any individual not to release personal information, to use only secure websites— [Interruption.]—to get credit references and, of course, to notify key players of changes of address— [Interruption.] It is a serious point, Mr. Speaker, and I am sorry that the Opposition seem to think— [Interruption.]

David Taylor: The British crime survey for 2007 records overall crime falling by 32 per cent. since 1997 and 5.5 million fewer victims than in 1995; yet fear of crime continues to paralyse too many lives, both old and young alike. What discussions has the Minister had with the Youth Justice Board and Department for Communities and Local Government colleagues about Age Concern recommendations to have regular intergenerational meetings in all communities so that young and old alike can discuss their fears and counter the destabilising threat of age-related segregation?

Vernon Coaker: I know that my hon. Friend works closely with Age Concern in his constituency, and as a former magistrate he knows the importance of different generations working together. At a recent conference, we discussed the issue of intergenerational liaison to enable elderly and younger people to discuss fear of crime. It is often said that there is a difference between older and younger people. There might be such a difference in perception, but it is in everybody's interest—whether they are old, middle aged or young—to reduce crime and the fear of crime.

Ian Taylor: May I congratulate the Minister on the initiative behind community support officers? It has been one of the better initiatives of this Government, and I welcome all those PCSOs in my constituency. However, as my constituency is in Surrey, he will be more than aware of the Government's gross underfunding, under the formulae, of Surrey police. This has become a crisis situation. He has proposed capping the police element of the county council's council tax, yet has made no offer to substitute in relation to the shortfall that would then emerge for Surrey police. The year-on-year underfunding of the Surrey force is causing great concern for the residents of that county.

Tony McNulty: I am more than aware of the circumstances of Surrey's police and their resource base, although I do not think that I characterised that in quite the terms that the hon. Gentleman used. He will know that following my hon. Friend the Minister for Local Government announcing the capping criteria, all police authorities involved have some 21 days to put their case together. My hon. Friend and I will be meeting them.
	I am sure that Surrey will put its case, and do so quite robustly, and I am happy to offer the hon. Gentleman and other Surrey MPs a separate meeting to look at that matter, as I have authorities on the list of six or seven police authorities that are at least in the frame to be capped, although they will not necessarily be so. Those decisions will be determined at a later date.

Jacqui Smith: My Department is responsible for the security of our nation's borders. That is why I launched the new UK Border Agency, which brings together the work of the Border and Immigration Agency, Ukvisas and Customs at the border. In its first two weeks alone, the agency barred more than 800 illegal migrants from boarding planes to the UK or crossing into Britain at juxtaposed controls, and seized more than 50 kg of ecstasy, 40 kg of cocaine and 20 kg of heroin. It is vital for the agency to be fully accountable for its work, which is why I am pleased to announce that I am appointing John Vine as the first chief inspector for the UK Border Agency. Mr Vine has been chief constable of Tayside police since 2000, during which time he was president of the Association of Chief Police Officers in Scotland. He will take up his appointment in July 2008.

Tony Baldry: When will the Home Secretary recognise that there is no evidence in favour of extending detention without charge beyond 28 days? It is not just the usual suspects who are saying that; it is being said by Sir Ken MacDonald, the Director of Public Prosecutions, and by Sue Hemming, who heads the counter-terrorism section of the Crown Prosecution Service. A whole cacophony of informed opinion opposes the Home Secretary on this matter. Sir Ian Blair has said that there has been no case in which the Met police have required a person to be held for more than 28 days. When will the Home Secretary present the House with evidence to support this substantial erosion of liberty?

Joan Humble: Last week my right hon. Friend made a statement about preventing people from becoming terrorists. As she will know, the Lancashire constabulary already work closely with communities, schools and places of worship. Can she explain how her initiative will take that work further to identify, in particular, young people who may be led astray and prevent them from becoming next year's or next month's terrorists?

Jacqui Smith: My hon. Friend has made an important point. In the short term, it is crucial for us to have the legislation and the ability to investigate and bring to justice people who are now plotting terrorist attacks against our country and our interests, but in the longer term we cannot arrest our way out of the problem. That is why we need to invest in expertise and capacity so that work can be done in our prisons and with the young people cited by my hon. Friend, whether through the provision of extra police officers or through the money that my right hon. Friend the Secretary of State for Communities and Local Government has made available to community organisations. We need to prevent people from becoming terrorists and supporting violent extremism in the first place. We take this issue seriously because, as my hon. Friend says, in the long term that is the way in which we will prevent the continued and growing threat to this country from terrorism.

Tony McNulty: The Home Office, working with the 43 police forces, is constantly reviewing the information that it keeps. I think the hon. Gentleman is completely in error; I say that with hesitation, not least because he has recently beaten up the "Pink Pounder", who is 10 years older than he is. Quite why the hon. Gentleman should be getting in a boxing ring with someone 10 years older is his own business. Those data will be collected; information on police injuries is important to us. Whether the information is collected in the form he suggests may have changed, but we are constantly reviewing our data. I am happy to meet him to discuss the matter further, but not in a boxing ring.

Vernon Coaker: I know that my hon. Friend is very concerned about the effects of binge drinking in her constituency and across the country and she will know that the Home Office and the Department of Health are looking at the impact of discounting in supermarkets and elsewhere and the effect that that has on alcohol consumption. That report will be with us in July or August of this year. We look forward to receiving it so that we can determine the best way forward in that important area of work.

David Davis: Before I ask my question, may I thank the Home Secretary for what she had to say about Gwyneth Dunwoody? She was a very close friend of mine and we will all miss her greatly.
	After the aggressive behaviour of the blue-tracksuited Chinese officials guarding the Olympic torch relay through London, I wrote to the Home Secretary to ask what authorisation she had given to these characters to exercise force on the streets of London. She wrote back and said none. But she did not answer the question as to what checks she had made into their background and particularly whether they were members of the Chinese People's Armed Police, a paramilitary riot control organisation. Will she answer that now? What checks did she do? Were they members of the People's Armed Police? On what legal basis did they manhandle British citizens on the streets of London?

David Davis: Well, we note that we still have not got the answer as to who they were. But even the Mayor of London concedes that it was a mistake to subcontract crowd control to Chinese military security. If Chinese military security was not authorised, as she says, what representations has she made to the Chinese Government about their assault on British citizens? Has she made it clear that they cannot behave as though Trafalgar square is Tiananmen square?

Ben Wallace: Last year, the Association of Chief Police Officers led a review of the Regulation of Investigatory Powers Act 2000 and made some 20 legislative recommendations to allow front-line policemen, crime squads and counter-terrorism officers to carry out their jobs more efficiently, and to ensure that terrorism is off our streets sooner rather than later. Why, then, is not one of those 20 recommendations included in the Counter-Terrorism Bill due to be looked at in Committee this week? Is that not because that Bill is much more about political posturing than about helping our front-line officers?

Tony McNulty: Certainly not, in answer to that last question: the Counter-Terrorism Bill is about the protection and security of the public in this country, full stop.  [Interruption.] No, absolutely not; the right hon. Member for Haltemprice and Howden (David Davis) is entirely wrong. Unlike him—as he declared in  The Sunday Telegraph some time ago—we do not run counter-terrorism and security policy by focus group; he should be ashamed of himself for that. We take national security more seriously. Many of the 20 recommendations mentioned do not require legislation; many of them—certainly those to do with bureaucracy and paperwork—have been dealt with by ACPO. I agree, however, with the import of the comments of the hon. Member for Lancaster and Wyre (Mr. Wallace) that there is still an issue to do with police forces taking full cognisance of ACPO's guidance; we do not need 16 pages in order to authorise many of the aspects of intervention and surveillance under RIPA, as ACPO says that two will suffice. There will also be a need for further legislation in terms of not only ACPO's recommendations, but other aspects of intercept and surveillance more generally. Hopefully, they will be dealt with at a subsequent time when we find the appropriate legislative vehicle.

Jacqui Smith: Let me quote the words of assistant commissioner Tarique Ghaffur on Friday:
	"I do not lead on counter-terrorism matters for the Metropolitan Police Service and I respect the professional assessment of colleagues who deal with counter-terrorism on a daily basis, and who envisage circumstances arising when the current upper limit of 28 days is not going to prove sufficient."
	Those colleagues include Peter Clarke, former head of counter-terrorist command, Bob Quick, assistant commissioner for special operations—whose letter to me is available in the House of Commons Library—ACPO and the commissioner of the Metropolitan police.
	I choose, in making a judgment about keeping this country safe, to listen to the police officers whom we task with investigating terrorist offences and keeping us safe in a proportionate and precautionary way. Unlike Opposition Members, I am not willing to live with the risk of not taking action now to keep this country safe.

Alistair Darling: With your permission, Mr. Speaker, I would like to make a statement about this morning's announcement by the Bank of England to improve conditions in the financial markets. This scheme has been developed following extensive discussions with the Treasury and the Financial Services Authority. I also want to report on the recent G7 meeting in Washington on restoring financial stability to financial markets. I will also report on the measures that we are taking here at home to strengthen the stability of the banking system, as well as to help home owners with their mortgages.
	Before I set out in further detail the Bank of England's special scheme, let me remind the House of the background against which it has been developed. The financial markets throughout the world remain turbulent, following the problems that arose in the US housing market last year. Functioning financial markets rely on banks and building societies being able to raise finance from each other, and from other investors, including through securitisation markets and through inter-bank lending markets. These funds can then be used to finance lending to businesses and to consumers, including the provision of mortgages.
	However, global financial markets are currently not functioning normally. Across the world, there is a lack of confidence in credit markets, most notably in mortgage-backed securities. That lack of confidence was prompted by the downturn in the US housing market, and in particular by the problems associated with sub-prime mortgages there. Banks are reluctant to lend to each other, and as a result lending to customers is more expensive and more restricted.
	Along with other central banks, the Bank of England has, over the past few months, made additional funding available to the markets through its regular market operations. The UK financial system remains fundamentally strong, and the Bank of England's action has helped to take some of the pressure out of the system by giving banks additional liquidity to continue their usual banking operations. Indeed, last week the Bank of England made a further £15 billion available, over three months, as part of its open market operations, and the Governor has said that he is committed to providing the liquidity assistance that the system as a whole needs to enable it to function normally.
	Here at home, the economy continues to grow. Last week's figures confirm that unemployment remains low and employment high. That, and the recent interest rate cuts, will provide wider support for the housing market and the wider economy. As banks here and across the world disclose their losses and strengthen their financial positions, which will help to rebuild confidence, the Bank of England can now take action to ease conditions in the financial markets, particularly in relation to mortgage-backed securities.
	The special scheme announced today by the Bank of England is a further step towards tackling the problems that have become more evident in recent weeks with the increasing cost and decreasing availability of lending by banks and building societies. Under the new scheme, for a six-month period the banks and building societies, and other institutions that are eligible for the Bank's standing facility, will be able to enter into agreements with the Bank of England under which they exchange high-quality asset-backed securities for Treasury bills. They can then hold these bills or trade them in the markets. Each exchange agreement will be for a maximum of a year but can be renewed at the Bank's discretion, so that the exchange could be ultimately for up to three years. The arrangement is available only for assets existing at the end of December last year and does not apply to new lending since then.
	At the end of the scheme, the banks will return the Treasury bills to the Bank of England and will receive back the securities that they provided as collateral. This means that the banks will continue to hold the risk on the securities that they provide, so it is they, rather than the Bank of England, that will be exposed to any fall in value. At all times, the banks must provide as security to the Bank of England assets worth significantly more than the Treasury bills they receive in return. If the value of their assets falls, the banks must provide more assets to the Bank of England or return some of their Treasury bills. They will be charged a commercial rate, so there is no subsidy to the banking sector.
	The Bank of England expects the initial take-up to be £50 billion. It will monitor the position daily, both to check new bids from banks and to track the value of the assets exchanged as collateral. The Treasury is supporting the scheme announced by the Bank of England by lending to it—at a commercial rate—the Treasury bills which it will then exchange with the banks and building societies. As the House will know, the Government stand behind the Bank as its sole shareholder, and we are making this clear by providing an indemnity. The Bank of England believes that these measures will support the banking sector during the present period of uncertainty and will help to restore the stability that the financial markets need both now and in the longer term. This will help to alleviate the problems that have seen banks reluctant to lend to each other, and, in turn, support the provision of new mortgage lending.
	Maintaining economic and financial stability is a key objective. In addition to the Bank of England's announcement, I can confirm to the House that the Government will take further action at home, and internationally, to restore stability in financial markets. It is important that banks continue to make full disclosure of their exposure to losses, and that they do so as soon as possible. That is why, at the G7 and International Monetary Fund committee meetings in Washington, we agreed that banks should be as open as possible—and as quickly as possible—in order to remove the continuing uncertainty as to their true positions. This process has started throughout the world, including here in Britain, with banks disclosing their losses and making proposals to rebuild their capital position.
	Transparency is an essential part, along with other steps that we are taking, of stabilising financial markets. In Washington last week, the Financial Stability Forum agreed a range of actions—some to be implemented in the next three months, and others for the longer term. We agreed to strengthen the oversight of risk management, including capital and liquidity; clearer standards for valuation and transparency; and changes in the role and use of credit ratings. We will strengthen international co-operation so that we are better able to prevent crises and deal with problems that occur. We are also working with the IMF to allow it to play a greater role in providing early warning of the threats to financial stability, so that the relevant authorities can take early action to prevent these actions in the future.
	Here at home, we are about to finish consulting on the reforms to the banking system that I announced in January. These reforms will make it easier to intervene in the event that a bank gets into trouble, in order to protect depositors and maintain the stability of the financial system. Because it is important that we get this right, I will continue to hold discussions with the industry on the detail of these proposals before bringing forward legislation. We will also want to make changes to the Bank of England to emphasise its role in maintaining financial stability.
	The responses that we have received so far to the consultation have made it clear that, given the importance of these reforms, it is crucial that we have further discussions. Once those are completed, I can confirm that it is our intention to introduce legislation this Session to strengthen financial stability and depositor protection. The legislation needs to be on the statute book early next year, when some of the provisions of the Banking (Special Provisions) Act 2008, which we passed in February, are due to expire.
	Finally, we are determined to do everything that we can to help home owners, so I am meeting the Council of Mortgage Lenders, the Finance and Leasing Association and major lenders tomorrow, along with the Chief Secretary to the Treasury and the Minister for Housing. Since 2004, mortgage lenders have been required by statute to treat their customers fairly, and at our meeting I will be discussing how banks and building societies can help people whose fixed-rate mortgages are coming to an end, as well as helping people who may get into difficulties in repaying their mortgages. Banks and building societies have a duty to treat their customers fairly and, in the light of everything we are doing, I want to discuss how they can pass on the benefits of falling interest rates as well as wider Government support to mortgage holders.
	The Government will continue, along with the Bank of England and the Financial Services Authority, to do everything they can to maintain stability. The announcement by the Bank of England this morning will help to resolve problems in the wholesale financial markets, which have a subsequent impact on the retail markets, and so help businesses, individuals and, in particular, the mortgage market. I commend this statement to the House.

George Osborne: I thank the Chancellor for prior sight of his statement and the Governor of the Bank of England, who phoned me yesterday to explain in advance what he was proposing to do. On a lighter note, I welcome the hon. Member for Sheffield, Hillsborough (Ms Smith), who is still in her place—the call from the west wing clearly worked, although judging by the Prime Minister's face it is the last time that they will talk.
	It is nine months since the credit crunch began. We know from the recent International Monetary Fund report, to which the Chancellor referred, that Britain has been left more exposed than any other European country: it has the highest Government borrowing in the developed world and the highest personal debt on record. Of course we welcome any international moves to improve stability. Such moves should include reforms to the Basel accords. Surely it is time to look at counter-cyclical capital rules, so that we try to avoid this boom and bust in debt and asset prices in future.
	I know that the Prime Minister was with the Kennedy clan last week. Perhaps he should borrow a phrase from President Kennedy: next time, let us fix the roof "when the sun is shining." In the meantime, the Bank of England has to pick up the pieces. I broadly welcome the liquidities scheme that it announced this morning.  [Interruption.] Indeed, we were recently calling for it. The difference between a well-judged intervention and a bail out lies in the details and in the protection offered to the taxpayer.
	Will the Chancellor, on the record today, give us his personal promise that as the man entrusted with the nation's finances, he believes that the guarantees are such that there will be no loss to the taxpayer? Would not the risk to the taxpayer be reduced still further if the Government had not agreed to indemnify securities backed by credit card debt as well as those backed by mortgages? Why has he done that? Perhaps he could explain that to the House, because we are trying to keep people in their houses, not prop up credit card lending. According to the market notice issued by the Bank this morning, the British taxpayer is underwriting securities based on United States credit card debt. Could the Chancellor confirm whether that is the case? Has he calculated the extent to which that will expose the taxpayer to developments in the US economy?
	The Chancellor is calling on the banks to be more transparent about their liabilities—I agree with him on that—but can he confirm that the Treasury has insisted that the scheme is designed to keep the taxpayer exposure off the Government's balance sheet? Is it true that the swaps are for 364 days because if they were for a day longer, £50 billion of debt would be added to the national debt? Crucially, what steps is he taking to ensure that the main lending banks will use the facility to pass lower rates to borrowers? Has he had any commitment from the banks that they will do that?
	We have seen the share prices of the banks go up since word of the scheme was leaked by the Prime Minister on his American trip, but what we have not seen is the mortgage costs come down. The last time the Chancellor called for the banks to pass on a rate cut, they all ignored him, even the bank that he now owns, and several actually raised their rates. Let us hope he is more successful when he meets the Council of Mortgage Lenders tomorrow.
	Finally, do not the past nine months reveal the folly of a Prime Minister who failed to use the global good times to prepare for the difficult times? A competent Government would be in a position to help people with the rising cost of living. Instead, this incompetent Government's 10p tax rise will add to the misery of some of the lowest paid families, who are already struggling with a rising cost of living, and could more than cancel out any help with mortgage costs that this scheme might bring. It is not too late for the Chancellor to back down and stop this tax raid on the poorest. We know from the climbdowns on capital gains tax and non-doms that this Chancellor is for turning. We know from his comments yesterday that he thinks the Prime Minister's last Budget was such a mess that he has to return to it. If the Chancellor has a concession to announce or if he wants to set out the process towards any concession, he should not leave it to his deputy; he should get up and have the courage to announce the concession at the Dispatch Box himself.
	The Bank of England is now playing its part to help families hit by the credit crunch, and it is time for the Government to do the same. It is time for the Government to stop fighting themselves and start fighting for the country. It is time for a Government who are on the people's side, not on people's backs.

Alistair Darling: I note that the shadow Chancellor had very little to say about the Bank of England scheme, just as he has had precious little to say throughout the past few months. Indeed, ever since these problems first arose in the financial markets last summer, what he has had to say has been contradictory. I note his invitation to discuss boom and bust—something that the Conservative party is well qualified to talk about. I prefer to remind the House that because we have a strong and stable economy, with low levels of unemployment and record levels of people in work, we are far better placed than most other economies to see through this period of financial uncertainty and turbulence.
	As for the hon. Gentleman's assertion that we are the only country affected, he must have noticed that banks and other financial institutions in the United States have been substantially affected. So too have banks in Germany and in other parts of the world. This problem is affecting the banking system throughout the world, which is why central banks and Governments have been taking action to try to alleviate it, with a view to getting the financial markets stabilised and returning to normality.
	The hon. Gentleman asked several questions. He asked about the Basel regime, and Basel II in particular. I am sure he would agree that it is important that the banks have adequate capital, and the Basel II agreement was meant to ensure that banks are properly capitalised, so that if they run into difficulties they have something to fall back on. Indeed, the evidence of the past few weeks is that several banks throughout the world need to improve their capital position.
	The hon. Gentleman asked how the banks will adapt from the present regime to the new regime, and the FSA is considering that. He also asked about the Bank of England scheme itself, which I understand he broadly welcomes. First, the issue of its classification is for the independent Office for National Statistics. Secondly, perhaps I may explain to him further how the scheme will work, although the Governor must have covered this ground in his helpful conversation yesterday. The Bank of England will make available Treasury bills to a bank in return for which it will have to pledge collateral. Most of that will be mortgage-backed securities, but it can include credit card assets, provided that they are AAA-rated, but in any event it will be for the Bank of England to decide what collateral it will accept.
	Crucially, as I think the hon. Gentleman acknowledged on the radio this morning, the Bank of England will ensure that it takes far more from the bank than it gives out in Treasury bills. An example is given in the Bank of England press notice today, which shows that if £100 of collateral is pledged, the receiving bank will get between £70 and £90, depending on the strength and value of the collateral. In other words, there will be a margin to protect the taxpayer. In addition, the banks will pay a fee.
	The crucial point is that the Bank of England is now able to take action to provide liquidity in the system for a longer period, which will help banks to restore their capital position and be able to start lending to businesses and individuals. That is crucial for this country in terms of improving the mortgage market. We want to ensure that institutions are sound, but we also want to see the benefits of what is happening passing to home owners, because they are entitled to expect not only support from lenders, but the Government to do everything they can to support them. We will continue to do that.

Vincent Cable: This is a strange day for a Labour Government. They are announcing that they are advancing billions of pounds to the banks at the same time as they are taking billions of pounds away from low-paid taxpayers. The Chancellor reminds me a little of a character whom I frequently encounter in the stories I read to my grandchildren—Little Red Riding Hood, who went around trying to be kind and helpful, but ended up being out-manoeuvred and then eaten by a wolf. The Chancellor is in the process of being slowly devoured by the British banking system. The banks are not in this position by some unfortunate accident. Their own Institute of— [ Interruption. ]

Vincent Cable: The banks are not in this position by accident. The Institute of International Finance, which is the bankers' group, acknowledged only last week that the banks had engaged in substantial bad practice. British banks have, over the past few years, lent too much, too quickly and too carelessly. The correct course of action, which the markets now anticipate, is that the banks should make a rights issue to their shareholders to raise money to offset the losses that they have to own up to. The problem is that chief executives do not want to go to the markets because they face the sack, so they rattle the begging bowl to the Government and hope that the Government will help them out, which they are doing.
	The Government have assured us that they are covering risk as a result of the discounts on the transfer of assets. Can the Chancellor tell us what those discounts are? Only two weeks ago, the International Monetary Fund made an independent estimate that residential property in the UK was 25 to 30 per cent. overvalued. That is the IMF's estimate; it has no axe to grind. Any asset-backed mortgages that have a discount of less than 30 per cent. represent a transfer of risk to the taxpayer. As I understand it, the Bank of England will provide a discount of up to 30 per cent. but not beyond it. Will the Chancellor explain that discrepancy?
	The statement also says—this was confirmed a few moments ago—that the Bank of England will accept credit cards as part of the transfer mechanism. It is said that they will be accepted because they have a AAA rating but after the complete mess that the rating agencies have made over the past six months and the meaninglessness of the AAA-rating designations, what possible confidence can we have in that assertion?
	My main point is this: if the Government are substantially to relax the conditions under which they make liquidity available to the banking system, surely conditions should be attached to that process. The most important condition should be that the banks accept up front and in writing that they will go to the markets to raise money in the way proposed by the Royal Bank of Scotland. Without that, there is no guarantee that the money raised in this way will not sit in the banks and will not be advanced to the markets, to small business and to residential borrowers. Without those guarantees, the package promises to be a liability to the taxpayer and to do little to sustain the domestic economy.

Alistair Darling: The answer to my hon. Friend's question is yes, they most certainly will. The shadow Chancellor offered to give us a free lecture on boom and bust, but he might have recalled the difficulties that arise when there are 3 million or 4 million people out of work, and interest rates are at 15 per cent. That is what destabilised the housing market in the early 1990s. The position today is quite different. There are very high levels of people in work, and historically low interest rates. What we have to deal with at the moment is an almost unprecedented shock to the financial system, or certainly one that we have not seen in recent generations. It is important that we and other banks, and authorities throughout the world, act together to do everything that we can to ensure stability in the banking system.

Alistair Darling: In relation to the first point, the right hon. Gentleman is aware that the FSA is responsible for the prudential supervision of the banking system and specifying what arrangements are required, first under Basel 1 and then under Basel 2, which is in the process of coming into force.
	In relation to the right hon. Gentleman's wider point about mortgages, we want to make sure that financial institutions are in good financial health, as I said in reply to the hon. Member for Twickenham (Dr. Cable). That means that some of them will have to restore their capital position. I believe that this is a way of helping to restore the position in relation to financial markets. I have made it very clear that, as most people in this country would expect, in taking action through the Bank of England—either in direct interest rate cuts or through today's support—the Government are entitled to expect that businesses, individuals and, in particular, mortgage payers see the benefits of what we are now doing.

Alistair Darling: In reply to the latter point, it is not possible for the Government to insist that a cut in the bank rate, for example, should be passed through in every case, whatever happens. There may be reasons why a financial institution is not able to do so—not least because it may need to make sure that its capital position is strong. However, one of the reasons why, in the present position, the rate decreases have not been passed on, and why people have found getting mortgages more difficult or expensive, is that there is less money around because banks are not lending to each other. When we sat down to discuss how we could try to resolve the problem, we asked ourselves what was the root cause of that lack of funding and of the increase in the cost of getting loans, and it is because the mortgage-backed security market is virtually shut. Sorting that problem will begin the process of freeing up the lending process. That, I believe, will enable us to achieve the situation that we all want, in which people receive the benefits of that. It is not possible to prescribe in a mechanistic way what every single institution in this country must do, but, as I said, if public money is doing its bit, people expect banks to do everything that they can so that the general public can see the benefit.

Alan Simpson: I welcome the Chancellor's statement, although I recognise that it cannot be the place of a Labour Government to bail out a banking sector that has allowed itself to privatise profits and nationalise debt. Will the Chancellor spell out to the House that he intends to bring forward regulations for the banking industry that will, first, make it illegal for banks to conduct the off-balance-sheet transactions that have taken us into our current mess and, secondly, require the full disclosure of the toxic debt that they are carrying? Is he confident that in the intervention in respect of access to mortgages, he will not be discriminating against the building societies that have remained in mutual ownership and in which people have saved, as opposed to those that converted to banks in order to speculate?

Alistair Darling: As I said, all institutions that are usually eligible for Bank of England support, including the building societies to which my hon. Friend refers, will be eligible in this regard as well. We are as mindful of their position as we are of that of other banks. I agree with what he says about the need for far greater transparency. There also need to be stricter rules in relation to off-balance-sheet activity, which has enabled some banks to get round their other regulatory responsibilities. That is clearly not a satisfactory position.
	In relation to my hon. Friend's first point, the important thing to remember is that this money, through these facilities, is effectively being lent, not given to these institutions—they have to repay it. As I said, the collateral—the security—that they have to offer in return will be greater than what they get out of the system. This is helping to put money into the system so that it starts to work again, because if we do not do that there is a risk that the problems that we now see will spread even further and take much longer to recover from. That is why we are taking this action.

Stewart Hosie: I welcome the statement and thank the Chancellor for advance notice of it. I particularly welcome the international elements of transparency, co-operation and early warning. I give a guarded welcome to the £50 billion of Treasury bills and the changes to the use of credit ratings. The Chancellor spoke about the background against which these new measures have been developed. He spoke about liquidity and rightly pointed out that we have known about this for some nine months. Given that last August the Governor of the Bank of England knew about the difficulties that the credit squeeze was causing, given that on 4 September last year the inter-bank offering rate was higher than the Bank of England emergency rate, and given that on 6 September the European Central Bank pumped £150 billion-worth of liquidity into the system, does the Chancellor now regret allowing the Governor last September not to increase liquidity in the system? Is the real lesson for the future that in a future event such as this, early intervention is always better than allowing things to drift on for eight, nine, 10 or 11 months?

Alistair Darling: My guess is that if we had introduced this particular scheme in August last year many people would have said, "Why on earth is this necessary?", because the extent and the depth of what has happened could not possibly have been foreseen at that time. As I have said before, certainly to the Treasury Committee and, I think, on the Floor of the House, by the time that Northern Rock started to get into difficulties it would have been very difficult to have helped it through a general provision, because by that time it needed so much money that it was almost inevitable that it would come along to the Bank of England. The hon. Gentleman is right that it is always to our advantage to prevent such things from happening in the first place, if that is possible. That is why we will introduce legislation later in this Session, which I hope that he and his party will support, that was partly foreshadowed by the Banking (Special Provisions) Act in connection with Northern Rock.

Alistair Darling: I agree with my hon. Friend, and the Qashqai has been extraordinarily successful. I know from my time as Secretary of State for Trade and Industry that the situation he describes came about partly because of the support that the Government were able to give Nissan, and because it recognised that we have a strong, stable economy and that the work force in the motor industry in the north-east is extremely highly skilled and motivated. Indeed, the amount of cars being produced by the motor industry at the moment is more reminiscent of what happened in the 1970s. The industry has been highly successful.

Alistair Darling: The scheme that we are considering applies to the institutions that can normally get support from the Bank of England. That would not include a utility company. Credit rating agencies should be perceived as a means of reaching a decision for a bank, utility company or anybody else. It is not something definitive, which demands no further questions. The responsibility for running companies and making decisions about debt must lie, first and foremost, with their boards of directors.

Gerald Howarth: On a point of order, Mr. Speaker. Following the recent Freedom of Information Act report released to  The Times last week by the Ministry of Defence on the humiliating abduction of Royal Navy and Royal Marine personnel by the Iranian revolutionary guard, I seek your advice on how to secure more transparent, accurate and timely information from the Government on the issue, which is obviously of great importance.
	According to an internal and unpublished Ministry of Defence report dated 13 April last year, the illegal abduction by the Iranian revolutionary guard navy took place in waters that are not internationally agreed to be Iraqi. However, the Secretary of State told the House on 19 June last year:
	"There is no doubt that HMS Cornwall was operating in Iraqi waters and that the incident itself took place in Iraqi waters."—[ Official Report, 19 June 2007; Vol. 461, c. 1266.]
	I am sure that you agree that it is important that Parliament is presented with the facts. It appears—it may not be the case—from the reports that the House was given information, which the Ministry of Defence has contradicted. Although there are Defence questions next week, the matter is so important to our foreign policy that I wonder whether you could advise me on how best I might seek information from a Ministry of Defence Minister.

Yvette Cooper: I beg to move, That the Bill be now read a Second time.
	The Finance Bill implements measures from the Budget 2007, the pre-Budget report last year and the Budget 2008. There are three central areas in the Bill that I want to highlight: support for the economy at a time of global economic turbulence; the changes to the personal tax system; and the long-term reforms for the future of our country, particularly those addressing climate change. I will take each of those three areas in turn.
	The Bill supports the economy at a time of significant global pressures. As the Chancellor discussed in his statement a moment ago, a serious global credit squeeze is taking place, triggered by the problems in the US sub-prime mortgage market. At the same time, as families in Britain know well, world food and fuel prices are increasing, too. As a result, all economies across the world are likely to be affected this year.
	The British economy is well placed to weather global storms. Inflation is lower here than in the US or the euro area. As the recent labour market figures show, claimant count unemployment is now at its lowest for more than 30 years. Product, capital and labour markets have become more flexible and responsive as a result of the skills and competition reforms that we have introduced. That is why the independent International Monetary Fund has forecast that the UK will be the joint fastest-growing economy in the G7 this year.
	However, resilience is not enough. We are doing more now to respond to the economic challenges that we face. So for a start, the Chancellor has today set out the steps that we are taking with partners across the world to help address the problems that have stopped banks from lending to each other. As well as the action to promote financial stability, supporting liquidity and monetary policy, the Budget sets fiscal policy to support the economy, too.
	The overall approach set out in the Budget and implemented through the Finance Bill is deliberately to put more money into the economy this year. We are using the flexibility that our fiscal rules give us to support additional borrowing in a sensible and sustainable way when the economic pressures are greatest. That is the right thing to be doing now. The overall impact of the fiscal decisions is to put billions more into the economy this year, through the automatic stabilisers and the decisions on things such as delaying the increase in fuel duty until October, which is implemented in the Bill. That is the right thing to do within the fiscal framework at a time when the economy faces global challenges.
	Thanks to our fiscal rules, we are able to protect investment at the same time. Previous Governments often slashed capital investment when economic pressures grew. We are protecting it, however, which means protecting investment for the future in our vital transport infrastructure, in our schools and hospitals, and in the underpinnings of the economic growth that we have sustained for so long.
	The Opposition have set out a rather different fiscal judgment—in fact, they have set out several, depending on their audience. First they say that borrowing is too high; then they set out ways to increase it further. In the past 12 months, they have set out £10 billion of unfunded tax promises. On Budget day alone, the shadow Chancellor set out proposals for borrowing an extra £5.4 billion, cutting inheritance tax except for millionaires, changing stamp duty and more. Six days later, after the Budget debates, the Opposition voted for an extra £10 billion in borrowing on top of that and against all the revenue-raising measures—on alcohol, on vehicle excise duty and so on—but for none of the tax cuts. Funny that. The Opposition have never told us where the money would come from or how they would make up their black hole—a black hole that just gets bigger and bigger.
	The Budget and the Finance Bill also support the economy in other ways, confirming corporation tax at 28 per cent. for this year and next—the lowest rate in the G7 and the lowest rate since the tax was introduced. The Bill also makes changes to the small companies rate to create a more level playing field, and introduces a new annual investment allowance to support capital investment.
	The Bill also increases research and development tax credits and makes the enterprise investment scheme—a tax scheme that supports small businesses—more generous. It restructures capital gains tax, creating a single rate of 18 per cent. with a new entrepreneurs relief. It implements more than 20 business tax simplification measures that were announced in the pre-Budget report and the Budget. So, the Bill supports the economy, simplifies the tax system to help businesses and provides overall support for the economy at a time of global pressures, while retaining a sustainable and responsible approach to the public finances.
	I want to turn now to the personal tax measures in the Bill. It sets out a major package of reforms to run alongside the changes made by the National Insurance Contributions Bill last year and the changes made to the tax credit system. These include the cut in the basic rate by 2p to 20p, its lowest rate for 75 years. They also include the removal of the 10p starting rate. They include increases in the tax allowance for pensioners, increases in the working tax credit for those in low-paid work, increases in child tax credits and, next year, child benefit to help families with children, and changes to the national insurance upper earnings limit.
	As the independent Institute for Fiscal Studies has set out, the poorest third of the population will benefit most from this package because of what we have done for pensioners, for families with children and for low-paid workers through allowances and tax credits. Indeed, the impact of the two Budgets and the pre-Budget report is to raise more than 500,000 children out of poverty. We should not underestimate the immense impact of this. When children grow up in poverty, it can disadvantage them for the whole of their lives. Lifting them out of poverty now could help them not only in the year to come but for decades into the future. As a result of these measures, households with children in the poorest fifth of the population will be on average £340 a year better off, and that will make a very big difference to them.
	Pensioners will benefit too—600,000 pensioners will be taken out of tax altogether—and the increases to the working tax credit will help low-paid workers without children. The working tax credit increases will mean that a single-earner household without children earning, say, £14,000 a year will be about £180 a year better off as a result of the Bill.
	I want to say more about those who will not benefit from this year's package. These are major reforms, and the majority of households will be better off or remain the same, although some will pay more as a result of the package. It is hard, in any one Budget, to help everyone, and those who lose in any one year might have benefited in previous years or might benefit in the next. If we look at the Budgets as a whole since 1997, we see that even those who are paying more in this year's Budget have still benefited significantly overall since 1997. So, on average, those who will pay more this year are still about £500 a year better off than they would have been under the 1997 personal tax and benefits system that the Conservatives left us with.

Graham Stuart: I am extremely grateful to the Chief Secretary for giving way. Further to the question from the hon. Member for Plymouth, Sutton (Linda Gilroy), can the Chief Secretary confirm that the number in the press at the weekend—namely, 5.3 million people—is correct? Will she share that with the House today?

Yvette Cooper: I believe that the right hon. Member for West Derbyshire (Mr. McLoughlin) is one of the few Members on the Conservative Front Bench who was not a member of the Bullingdon club, but that does not appear to have stopped him from engaging in student politics.
	As I was saying, the Bill will build on the progress that we have made over the past 11 years—

Madam Deputy Speaker: Order. I call Yvette Cooper.

Yvette Cooper: Since when have the Opposition cared about those on low incomes? Since when have they cared about the 10p rate? Last October, when the shadow Chancellor made his big speech calling for tax cuts, did he say that his priority then was to restore the 10p rate? Of course not. Did he say then that he was worried about low income households? Not a bit of it. What he talked about then was inheritance tax for millionaires. In his big speech on tax reform in February, did he say that he wanted to change the 10p rate? Not once. In his website call for action on Budget day this year, did he mention the 10p rate? Not once.
	What is the shadow Chancellor's policy now? The Conservatives would vote to keep the 10p rate now, but they will not say where the money would come from. They will vote to keep the rate, but they will not tell us whether they would restore it. The shadow Chancellor tells us about plenty of other taxes that he has promised to cut, but there is nothing on the 10p rate. They would vote to keep the rate, but now they admit that they do not even like it. The hon. Member for Runnymede and Weybridge (Mr. Hammond) said this weekend:
	"We would not necessarily re-introduce the 10p rate. We are quite happy with the idea of simplification."
	All the shadow Chancellor could say today was that he wanted to reopen the whole package. Perhaps the Conservatives could tell us whether that means he now thinks that we should stop the 2p cut in the basic rate.
	Once again this is shocking opportunism, and we will not take any lessons from the Conservative party on helping families on low incomes. That party opposed the minimum wage and even now still wants to opt out of the social chapter. Nor will we take any lessons from the party that is opposing the funding for the winter fuel payment this year and the child benefit increase next year.

Frank Field: I am very grateful to my right hon. Friend for giving way and pleased that she is making the point that when we debated this matter last year, the Opposition sat on their hands and did not support the amendment proposed by Labour Members. She has said that the Chancellor will return to the issue in the autumn. I know that her hands are tied on this, but may I remind her that the House returns to it next week? Many of us want to know what the Government propose to do to ensure that 5.3 million lower-paid workers are not made worse off by the Budget.

John McFall: As the Chief Secretary knows, it was the Treasury Committee that recognised that the 10p tax rate withdrawal would cause problems for many people; indeed, the Treasury official who appeared before the Committee last year mentioned that 5.3 million was the ball-park figure. In our report, we have asked the Treasury to look at that, but I will go one step further today and give the Chief Secretary and the Chancellor time to think about this before the end of the Second Reading debate tonight: I will ask my Committee to explore with the Chancellor and his officials who will lose out as a result of this 10p tax rate withdrawal and to look at any measures that could be implemented sooner rather than later to compensate them. I will ask my Committee members to look at that so that we can report back before June or July in order to inform the Treasury, in the hope that we can go a step further towards ensuring that we do not penalise poor people unnecessarily.

Ian Austin: If the hon. Gentleman expects anybody to take seriously his new-found concern for the poor and low paid, can he explain to us why his No. 1 tax reform proposal is inheritance tax reform to benefit multi-millionaires such as the shadow Chancellor and the Leader of the Opposition, or the abolition of stamp duty on shares to benefit multi-millionaire City traders? Can the hon. Gentleman tell us which way he voted on the minimum wage, the introduction of tax credits and the introduction of the winter fuel allowance, all of which show that Labour have been consistent in delivering better standards of living for the poor and low paid?

Philip Hammond: The hon. Gentleman has had enough of a turn today. He needs to scuttle back to No. 10. I hope that the purpose of his being here is to take the pulse and feel the mood. I hope that he will go back to No. 10 and tell his master what the mood is.
	Let me finish the quotation. The report stated that
	"the group of main losers from the abolition of the 10 pence rate of income tax seem an unreasonable target for raising additional tax revenues".
	The Prime Minister claimed that that was all done in the interests of tax simplification. The Conservatives are in favour of tax simplification, but we would not propose, nor can we support, a reform of the income tax system that is carried on the backs of the poorest. It is morally abhorrent.
	The truth is that the package had nothing to do with simplification. Why should it? Its author, after all, is the man who has doubled the length of our tax code and given us the most fiendishly complex tax system in the developed world. He simply does not do simplification. It had nothing to do with a long-term strategy either. Indeed, it undid that man's own long-term objective eight years after he had achieved it. As I have said already to my hon. Friend the Member for Tiverton and Honiton (Angela Browning), it was all about trying to convince the Labour party as it moved to choose its new leader that he could reach out, Blair-like, to middle England. He might have fooled them at the time, but if proof were needed of the extent to which the Prime Minister is out of touch with the British people, this debate delivers it.
	When the parliamentary Labour party met a few weeks ago and discussed the doubling of the 10p rate, a nameless Minister was quoted as saying:
	"Gordon did not seem to understand what they were talking about and kept insisting that nobody would lose out by the change. He...gave the impression he was living on another planet."
	Last week, the Prime Minister was not on another planet, but he was on another continent. He was still insisting that no one would lose out and he could not understand what all the fuss was about. The inner circle in the bunker with him remained in denial. The Minister for the Cabinet Office airily dismisses the fate of the 5 million people who are worse off as a result of the changes as a "matter of regret"—a minor piece of collateral damage in the path of the clunking fist. The Secretary of State for Children, Schools and Families apparently thinks that raising tax on the poor is part of the process of taking forward "the fairness agenda".
	Others understand; they get it. They come from all Opposition parties and from Labour, and include some Members on the Treasury Bench. The Lord Chancellor understands; so does the Minister for the Olympics. It appears that the penny is even slowly dropping for the Foreign Secretary. Perhaps even the Chancellor of the Exchequer was hinting last week in China that he understood. The hon. Member for Sheffield, Hillsborough (Ms Smith), who we are delighted to see in her place today, appears to have got the message. In her case, it was drowned out by another message that came across the Atlantic in a display of long-distance bullying that would put the Kremlin to shame. Those Members understand because they have been listening to their constituents, holding their surgeries and reading the letters and e-mails, as we all have, from people who are just working out what the Prime Minister's simplification means for them.

Mark Hendrick: Further to that point of order, Madam Deputy Speaker. Would it be in order for the Opposition to table an amendment, referring to this issue, that had already been tabled in Committee?

Philip Hammond: No, I am going to make some progress because I have already been speaking for half an hour.
	"Watch this space," the Exchequer Secretary said on Friday; I say to my hon. Friends that if we watch her space through to the next reshuffle, I fear that we may find it empty. Let us hope that she meant that, behind the intransigent bluster that the PM does so well, the backroom boys in the Treasury U-turn department were working over the weekend and yet another climbdown is in preparation—if not today, then before the debate in Committee next Monday. The Government found the money for concessions on non-doms and capital gains tax; they can look at the package and unpick it if they want to.
	I could make many other points about the Bill. The former Chancellor's Budget last year did not stop at the 10p rate for low-income families; when he had finished reversing his policy on the 10p rate of income tax, at the expense of low-income families, he reversed his policy on the taxation of small companies and announced an increase of 3p in the pound—hammering the very people whom he had encouraged just a few years earlier to incorporate their businesses with the now-abolished zero rate. The message is clear: people should not come here if they are looking for a stable and predictable fiscal regime for their business.
	Is the Prime Minister responsible for all the problems in the Finance Bill? That depends on who we think was the author of the pre-Budget report. The chaos and confusion that followed from the ill thought through proposals on the tail of the cancelled election last October have caused a huge problem in the business community and damaged Britain's reputation as a business-friendly environment and the Labour party's credibility with business even further. I could talk endlessly about those issues, but the mood of the House is to move on.
	I want to refer specifically to one more thing before I finish: the dramatic increase in powers being granted to Her Majesty's Revenue and Customs. Some tax experts are telling us that that is the single most important long-term aspect of the Bill. The pattern started with the Finance Act 2007, and without waiting to see how the new powers work in practice the Government have gone on to extend them to the whole range of taxes in this Bill.
	HMRC will be given powers to authorise itself to enter premises, including third-party premises. The safeguard on distraint of taxpayers' goods will be scrapped in primary legislation. There are constitutional questions around clause 117, which will create an order-making power to repeal or amend any primary legislation, including the Finance Act 2008 itself. These are huge new powers at a time when HMRC is miscalculating the taxes of 1 million or more of our fellow citizens every year, when public confidence in the chaotic administration of tax credits is at an all-time low, and when the shockingly casual attitude to data security has been exposed by the loss of the personal data of half the families in Britain. The Government's response is to give it more powers. This increase in powers is a step too far and a step too soon, and we will seek to postpone their implementation, if the Bill obtains a Second Reading, and to get them brought forward again in a stand-alone Bill that would be subject to scrutiny in the other place, which has expressed a strong interest in such kinds of bureaucratic powers.
	As the economy slows and we all peer into an uncertain future, this is the wrong Finance Bill to present to this House today.
	"We are where we are",
	as the Chancellor said on the "Today" programme on 13 March, and we all know who is responsible for getting us here, ill-prepared, over-borrowed and almost uniquely exposed—the same person who is responsible for most of the Chancellor's woes in this Finance Bill. At a time when families, particularly those on lower incomes, are struggling with the soaring cost of living and stagnant earnings, it clobbers them with tax increases. At a time when Britain desperately needs business investment to create the jobs and prosperity of tomorrow, it raises business capital taxes by 80 per cent. At a time when people crave certainty, it creates ambiguity, with arbitrary and sweeping new powers for the authorities and an unparalleled lack of clarity around some of its most important clauses.
	Most of all, this Finance Bill represents a breach of trust: with investors, who invested on the basis of Labour's long-term capital gains tax regime; with small businesses, who incorporated on the back of Labour's long-term small companies tax plan; and, above all, with the 5.3 million low-income households who were told by our Prime Minister, when he lowered their income tax in 1999,
	"When we make promises, we keep them."
	The weasel words that the Chief Secretary offered to the House will satisfy no one; they do not begin to address the Government's breach of trust with those on the lowest incomes in Britain. She goes on about 1997, talking about winter fuel payments that do not affect that group of people at all.
	Earlier this afternoon, we heard what the Bank of England is going to do to help Britain's hard-pressed families and businesses. Now it is the Government's turn. A promise is a promise. The Government need to go back to the drawing board and reconstruct their tax reform package so that it is not carried on the backs of the poorest in our society. Until they do, my hon. Friends and I, and I suspect many other honourable Members of this House, will not support this Bill.

John Redwood: Does the right hon. Gentleman agree that if we add the unfunded pension liabilities, the PFI and PPP off-balance sheet liabilities and the off-balance sheet liabilities for Network Rail and Northern Rock, public sector total obligations are in excess of gross national product, at around £1.5 trillion? That is an enormous figure.

John McFall: As the right hon. Gentleman knows, the Treasury Committee comprises members of all parties—his own, the Liberals and Labour. We have concluded that the fiscal position of the UK is strong in comparison to other EU countries.
	I want to focus on the measures to reduce poverty and on the 10p tax rate. The Treasury Committee considered the problems of marginal deduction rates and the impact of the abolition of the starting rate of income tax in the context of measures to reduce poverty. We welcome the increases in child benefit and child tax credit that are designed to achieve further progress on the Government's child poverty targets, and we specifically welcome the £1 billion that the Government found to fulfil those targets. As those on the Front Bench know, we were cautious about that because, in a previous report, we questioned whether the Government were resiling from their commitment. We were pleased to see that the £1 billion was included in the Budget proposals.
	We note the significant one-off increases to the winter fuel allowance, which should make all pensioner households better off in the tax year 2008-09, and which need to be built on by further measures in future years; those increases will help 9 million pensioner households. We also welcomed the maintenance of the 10 per cent. starting rate for savings for pensioners. Our concern about the abolition of the 10p income tax rate, however, is concentrated on households that do not stand to benefit from measures targeted on families with children, those seeking to return to work or pensioner households. We specifically said that those who do not gain from the measures on child poverty, fuel poverty and incentives to work will lose out, and we are talking largely about those on incomes of about £18,500 a year and less. We are talking about those who are under 60, who will not qualify for the winter fuel allowance; those with no under-18s in their households, who will not qualify for child poverty payments; early retirees; and those not claiming working tax credit, where take-up is low. The Minister will know that the tax credit take-up rate is about 19 or 20 per cent., which is scandalously low. I believe that £1.28 billion is available, and it is important that there is a campaign to increase the take-up rate. We cannot allow such a scandalously low figure to be maintained.

John McFall: I agree that that is a good concept. However, we are not nearly there at the moment and we must work with the system that we have. However, it is worth considering as a long-term proposal.

John McFall: The hon. Gentleman is a good and hard-working member of my Committee, but on the marginal rates of taxation he knows that, since tax credits were introduced in 1997, the 100 per cent. withdrawal rate has almost been abolished, and we are focusing on the 60 to 70 per cent. rate.
	I remember evidence from Mr. John Whiting of PricewaterhouseCoopers, one of our expert advisers on tax, who said that the high marginal deduction rates might be the consequence of the Government trying to achieve their social policy goals. He—and, indeed, Treasury officials—mentioned that the main reason for that was the extra help that the 2007 Budget introduced through tax credits. He said:
	"That brought more people into tax credits, the result being that more people then faced higher marginal deduction rates."
	On the one hand, we want to help people by bringing them into tax credits, but on the other, there are the marginal deduction rates. There is no doubt that there is an issue, to which the Treasury Committee will revert.
	However, the controversy about the removal of the 10p tax rate has highlighted the importance of the challenge for the Government to do more for those who slipped through the net of measures on child poverty and fuel poverty, especially by redoubling our efforts to make working tax credit take-up worth while for those in households without children.
	Ministers made the point about the number of people who are affected by the change. The Treasury Committee is clear about the matter. In evidence to the Committee last year, Mr. Mark Neale, the director of the budget, tax and welfare directorate at the Treasury, said that 5.3 million was the ballpark figure. We should all be straightforward and honest about that, identify the problem and state what we will do. I therefore reiterate my invitation to the Chief Secretary and others. I will put it to my members that the Treasury Committee examine the issue urgently and report back to the Treasury. I repeat that 5.3 million is a ballpark figure.
	The Treasury stated to us in evidence:
	"Estimates are that 0.8 million single earners with income under £18,500 will see their income decrease by around £1.45 a week on average... The maximum amount any single individual could be worse off by is £232 per year (£4.46 per week) about 3 per cent. of net income... For households that are worse off, the average loss is about £2 per week."
	The Treasury recognises that. Indeed, the Chancellor acknowledges it. In evidence to the Committee, he clearly said that it would affect women between the ages of 60 and 65. Let us therefore establish that people will be affected. People on low incomes will be affected and we need to ensure who the winners and the losers are.
	One of the problems is identifying the winners and the losers. I have been asked in many interviews in the past few weeks why it has taken Members of Parliament a year to wake up to the matter. No specific information identified the winners and losers and one had to wait until the new arrangements were introduced in the Department for Work and Pensions—that happened last month. Before I was interviewed on one television programme, I tried to find out, through contact with representatives of the Department for Work and Pensions exactly what the new measures were. They said that they would not be available until the first Monday in April.
	We got that information, from which I found out that, sure, a working household with no children with a combined income of £17,500 to £18,000 a year would lose about £13 a week, but also that in some instances single earners would gain. There is a fuzziness, and we do not know who the winners or the losers are. I refer the Minister to the Treasury Committee's clear recommendation in its report on the 2007 Budget:
	"An important part of any change to the personal taxation regime must be that both winners and losers can identify, with ease, how they are affected by the changes stated within a Budget package. We recommend that, in future, this information be provided within the Red Book."
	If the Government had indeed provided that information in the Red Book, we might not be having the highly charged debate on the issue that we are having today.

Betty Williams: Does my right hon. Friend agree that the media's claims that Labour Back Benchers have been silent on the issue for 12 months are misleading? Members like me were writing to the Treasury about what our constituents were raising with us on the issue 12 months ago.

Eric Illsley: Over the past hour or so, my right hon. Friend has made the Government the offer that his Committee look again at the 2008 Budget. I hope that those on the Front Bench will intervene to indicate that they accept that offer. May I impress upon my right hon. Friend the need to undertake that inquiry with some urgency, in order that the Government might have a vehicle through which to alleviate the situation in which many lower-paid taxpayers find themselves?

John McFall: That is utter nonsense. The fact is that 21 million people—four out of five people—will gain from the measures. It is typical of the Scottish National party to say that we can find a solution to the problem by creating further anarchy. We cannot do that; we have to be realistic and grown up about this. The fact is that there is a taxation issue here in the Budget, and we need to be positive about it. Why do I want a solution? I want a solution because poorer people will be affected, and I would have hoped that the hon. Gentleman shared that worthy concept rather than warmongering and trying to create division. He is living up to his past, however, and he will probably continue to do so.
	I want to move on to better things. The only other measure that I want to talk about today is personal allowances for non-dom taxpayers. Public debate has focused on the issue of non-doms who will be required to pay the £30,000 charge, but many shorter-term non-doms will be affected by the removal of personal allowances, including many with quite small amounts of unremitted foreign income. There has been a focus on the wealthy non-doms, but almost none on the low and middle-income groups who will be affected by the changes.
	There is a serious risk that HMRC could face the problem of millions of foreign workers either seeking advice or being in breach of the new law. John Whiting, our adviser on the Select Committee, was very clear on the issue of low-income non-doms, and he said that millions of them could be affected. I am aware that the Treasury has estimated that there are 80,000 people with both a UK and a foreign income. That might be because it did not include the unwitting non-doms. The Treasury Select Committee report makes it clear that we feel there has been insufficient consideration of the possible impact of the tax changes in the Budget on middle and lower income groups, and we would like the Government to look at that.
	By far the largest group of people affected will be the lower and non-income professional workers. An example that has been cited are the typical Polish or Romanian migrant workers who pay UK taxes but who probably do not even know that they are non-doms because they do not know the term, and therefore do not realise that they are about to lose their personal allowance. They will certainly not have any advisers. That group could unwittingly be in breach of the new £2,000 limit for non-doms, and could therefore suddenly lose their UK tax-free allowance. We are asking the Government to be aware of that problem. More importantly, in the light of some of the recent comments about the capability of HMRC, we are asking HMRC to be aware of it. If it is likely to affect millions of people, HMRC needs to understand the problem that is coming down the line.

Jeremy Browne: There are two main ways in which a Member of this House can judge a Finance Bill, a Budget or, for that matter, a Government. The first is to ask whether the measure has a vision, a sense of purpose and a direction. The second is to ask whether it has what the Prime Minister calls a moral compass. That is the issue that has occupied us to the greatest extent so far today, and the one to which I will devote the largest part of my speech. It is the specific issue of the doubling of the 10p tax rate that is causing the greatest amount of grief and unhappiness among my constituents and among people right across the country.
	First, however, I want to touch briefly on whether the Budget had a vision or a sense of purpose, and whether it told us what the Labour party seeks to achieve and what drives the Government. In this debate, we have been discussing a change that was made in the Budget of 2007. The 2008 Budget has escaped without being given much attention at all because it was the most puny, unambitious Budget in living memory.
	During the parliamentary recess, I had the opportunity to attend a commemorative service in my constituency to mark the 40th anniversary of the assassination of Martin Luther King in Memphis, Tennessee, in 1968. During the service, I reflected that he had been a man of huge vision. He was an inspirational figure who had a dream and who had stood on the mountain top. He had seen the promised land. How diminished our politics seem by comparison today.
	The Labour party, which was founded just over a century ago, was founded for entirely noble reasons. Many people in this House, not only those in the Labour party, will conclude that the formation of the Labour party was to the benefit of the politics of this nation and the many people who live in it. The Labour party was out of government from when I was eight years old until just before my 27th birthday. During that period—from the earliest that I can remember through to my mid-twenties—many people worked in the Labour party to try to make it fit to govern this country again. Many people, including those on the Labour Benches, when they heard this year's Budget, will have been entitled to ask, "Is that it? Is that what it was all for? Is this what our great party has become?" It was the thinnest, most unambitious, managerial Budget that I can remember.
	Another notable American politician, Barack Obama, is fond of saying that politics is becoming smaller just as the issue are becoming bigger. That is particularly true in relation to this Government, who seem to have no purpose or sense of direction left. Yet there are a number of visionary causes that they or any UK Government could adopt. After a massive expansion over the last decade, the Government are now spending £1,700 million every single day—in fact, the Government's daily expenditure is now more than the entire expenditure of the Foreign and Commonwealth Office for a whole year.
	As I say, there is no lack of issues for the House and the Government to get to grips with; the question is not "How much?" but "How?" We are no longer in the area of talking about whether taxes and public spending can be endlessly raised; rather, we are in the area of talking about how we can spend that money more efficiently and achieve better value for money on behalf of all our constituents in order to achieve the objectives that we all share. The primary domestic objective must be to make public services more accessible and more accountable. How can we, as a group of politicians, ensure that people of all incomes can be empowered to shape their own lives? The big domestic challenge of the 21st century is to create health and school systems that are fit for our times—not just through extra public spending, but through meaningful reform.
	Of course, the greatest challenge of all facing politicians of our era is how we can protect our planet from ruinous climate change. There is clearly an agenda there for a Government who have vision, a sense of direction and a sense of purpose—a Government who can grasp the scale of the threat and the opportunities and who have the imagination to respond.

Jeremy Browne: We "Brownes" must stick together to ensure that the main "Brown" is put in his place.  [Interruption.] I keep hearing sedentary interventions, asking whether the hon. Gentleman was satisfied with the conclusion of his negotiations with the current Prime Minister. I will gladly give way to him again if he will tell me whether he feels that the current arrangements are to his satisfaction.

Philip Hammond: Just for the record, the reason my right hon. Friend the Member for Witney (Mr. Cameron) did not notice it is that it did not appear in the Chancellor's speech. We had to get the Red Book and plough through its tables to understand precisely the sleight of hand that the Chancellor had used.

Jeremy Browne: I did, although he chose to relinquish his post. However, it reflects well on our party that we have managed to find another person of equal talent—some would say even greater, but that is for other Members to conclude.
	I am confident that at the next general election, when the leader of the Liberal Democrats, assisted by my right hon. and learned Friend and others, puts his case to the electorate, the voters of this country will not be impressed by a Labour Government who have left more than 5 million people on low and low to middle incomes worse off.
	The Prime Minister is now in a state of absolute denial about the effect of his changes. According to reports that I hear second hand—I am happy to take interventions from Labour MPs on this—he is telling the parliamentary Labour party that nobody will lose as a result of the changes made in his final Budget when we know, and as has been confirmed this afternoon by the Chairman of the Select Committee on Treasury, the right hon. Member for West Dunbartonshire (John McFall), that more than 5 million people will lose as a result of the changes announced in 2007. No wonder Lord Desai, a distinguished economic commentator on the Labour Benches in the House of Lords, said:
	"Gordon Brown was put on earth to remind people how good Tony Blair was".
	We have a complete disintegration of discipline in the Labour party. We have the Prime Minister, waiting in an ante-room in the west wing of the White House for his audience with the most powerful politician in the world, having to divert his attention to emergency phone calls to a Treasury Parliamentary Private Secretary—not a PPS from another Department, but a PPS from the relevant Department—so that he could plead with her, "Before I have an audience with George W. Bush about issues of global magnitude, please, please will you not embarrass me by resigning as PPS to the Chief Secretary?" It is a pitiful state of affairs.
	The hon. Member for Sheffield, Hillsborough (Ms Smith) was not the only rebellious PPS—we have a full-scale revolt: the hon. Members for Sittingbourne and Sheppey (Derek Wyatt), for Blaydon (Mr. Anderson), for Barnsley, East and Mexborough (Jeff Ennis), for Hove (Ms Barlow), for Stafford (Mr. Kidney) and for Ealing, North (Stephen Pound), and, no doubt, many others, whose unfavourable comments I have yet to read in the newspapers. The Chancellor used his Budget to tell us that he would crack down on carrier bags; the Labour Chief Whip is now having to crack down on the bag carriers.
	It is an extraordinary state of affairs that it has taken Labour MPs so long to realise the consequences of doubling the 10p rate. That proposal was not only in last year's Budget, which took place on 21 March 2007, because only a month ago, on 18 March 2008, during the Divisions in the House on the Budget resolutions, we yet again had a vote on the 10p rate. The Government's position was carried with the support of precisely those Labour MPs who are now making such a fuss, because, as I understand it, they had not then had the opportunity to talk to their constituents and they had not canvassed for the local elections.  [Interruption.] As is being said from a sedentary position, it is amazing what an opinion poll or two will do to refocus minds and allow people to rediscover their consciences.

Rob Marris: I am grateful to the hon. Gentleman for his generosity in giving way. I am a PPS and I have expressed reservations to the Government. I did so in the House on 30 April last year.
	I caution the hon. Gentleman. I take some of his points about equality and fairness for the lower paid, but before he goes too far down this line, he should remember that two years ago his party was making proposals for swingeing increases in green taxes, some of which would be counter-balanced by drops in other taxes. The hon. Member for Eastleigh (Chris Huhne), speaking for the Liberal Democrats on those matters, made it quite clear that green taxes would be ratcheted up and up and up. Given that those measures would have been there to change behaviour, they would have affected the lower paid badly.

Jeremy Browne: I do not want to go too far off the beaten track, but the point that we have consistently made, and which the Government have not heeded, is that there will be public support for environmental taxation only if that taxation is offset by reductions in other taxes, most notably income taxes.
	I am in a strange position. I took an intervention from one Labour Back Bencher, the hon. Member for Wirral, West (Stephen Hesford), who said, "Look at our environmental credentials; they are greater than you claim they are," and I am now hearing that the environmental credentials of the Liberal Democrats are excessively ambitious. Yet again, the lack of any sense of purpose and direction in the Government becomes obvious.
	I was listening to Radio 4 on the evening of Friday 18 April and when asked what would happen as a result of the growing rebellion in the Labour ranks over doubling the 10p rate, a Treasury Minister said, "Watch this space." Well, we watched it today, and unless I missed something the Chief Secretary said no changes are possible. In fact, over the weekend, she took to the airwaves to damp down any speculation that that other Treasury Minister may have been suggesting or hinting at imminent changes.
	Labour MPs need to realise that there is no great salvation coming from the No. 10 bunker; they are on their own. In the bunker, all is dither and meltdown. If they want to save their lower and lower to middle income-earning constituents from taking a big tax hit precisely when their food and other bills, council tax and fuel bills are going up, that will not be achieved by this Prime Minister and this Chancellor. Labour MPs will have to act alone to try to represent the interests of their constituents.

Stuart Bell: It is a pleasure to follow the hon. Member for Taunton (Mr. Browne). He reminds me of a former Member of Parliament, Bob Woof, whom many Members may recall. Each year he made a Budget speech, but about the previous year's Budget. He read the previous year's Budget carefully, and then made his speech. Having listened to all of today's debate so far, I have a feeling that this too is a debate on last year's Budget, and on last year's abolition of the 10 per cent. tax rate.
	I remind the House that last year, as now, there was a Budget statement, followed by publication of the Red Book, which has been mentioned. It was followed by a Budget debate which continued for about five days, a debate on Second Reading of the Finance Bill—which we are having now—a Committee stage, and Third Reading. Where the House went wrong in not picking up the fact that the 10 per cent. rate was to go must be a mystery to most of us. It seems to me that the reason why we are having a debate on that particular aspect is the Institute for Fiscal Studies and the figure of 5.3 million net losers, and I am not sure that the IFS report actually said that.
	I remind Labour MPs who are signing early-day motions and carrying their consciences on their sleeves that, in the 11 years of the Labour Government—to get on to the "vision thing" of the hon. Member for Taunton—our vision has been clear. We believed in a fundamental and irreversible shift in the balance of wealth and power to workers and their families. Over those 11 years, we have brought in a national minimum wage, against great hostility in this House from the Opposition, who said that it would cost jobs, and increased it to more than £5 an hour. We introduced tax credits, of which we have heard some criticism, to which I shall refer in a moment. We have signed the social chapter; the Conservatives not only did not support it, but have said that they will repeal it when they come to power. We have brought in specific measures for the elderly, of which the increases in winter fuel allowances are one. Over 11 years, we have moved the balance of power towards workers and their families.
	If I may spend a moment on the 10 per cent. rate, the tax package last year was designed to target extra support to help many of those who only paid the 10p rate. For those aged 65 and above, age-related allowances were increased by £1,180 above inflation, meaning that 600,000 pensioners paid no income tax at all. For families with children, the child tax credit child element increased by £175 above earnings indexation from £1,845 to £2,085, providing additional financial support for families and further reducing child poverty.
	For those in work on low incomes, the first income threshold of working tax credit rose significantly from £5,220 to £6,420. Supporting work is the best route out of poverty through increasing the gain from work for many low income households. That is the background to the abolition of the 10 per cent. rate.
	We do not want to go back over history or to recite poetry:
	"see how dark the backward stream!
	A little moment passed so smiling!"
	It is a long time since we had a Conservative Government, but under the Conservatives the basic rate of tax was 23p in the pound with no tax credits other than the limited benefit from family credit. That meant that even the poorest taxpayers paid 23p in the pound. Under Labour, the basic rate is now 20p in the pound and there has been a major increase in tax credits, particularly for those with children but also for those without.
	The reforms overall meant that all income tax payers have benefited compared with 1997. Those on lower and middle incomes have benefited the most. Giving low income families a negative income tax rate—that is to say a tax credit—is better than leaving in place the 10p rate; that was the philosophy and reasoning behind the Government's decision, which was not picked up throughout last year's Budget proceedings.
	The tax credits system—a minus rate of income tax—is the best way to help people out of poverty. Each year, the Labour Government have put more and more resources into tax credits. The 10p rate is not a targeted tax measure as all taxpayers benefit from it, including higher earners, such as those on £100,000 a year who would still only pay 10p in the pound on the first £2,230 of their taxable income.
	As my hon. Friend the Member for Dumfries and Galloway (Mr. Brown) and my right hon. Friend the Member for West Dunbartonshire (Mr. McFall) said, it is because of these tax credits that we have been able to deliver historic achievements such as taking millions of pensioners and children out of poverty. The tax credits mean that we have rates of 40 per cent. and 20 per cent. for income tax, but that we have effective tax rates of minus 1 per cent. right up to minus 200 per cent. through tax credits, so that the tax and benefits system pays more to people on low and middle incomes.
	While the House is focused on this matter, we must not overlook the basis of our economy. Part of the Bill calls for the promotion of access to finance and resources for small and medium-sized enterprise and for the enterprise management incentive schemes. In this respect, I refer to David Smith's economic outlook column in  The Sunday Times yesterday. The hon. Member for Taunton gave us a great review of the press over the last 10 days, but David Smith said that our
	"job market remains extraordinarily strong, with a rise of 152,000 in employment in the December-February period. In the past year, employment has climbed by 456,000 to a record 29.51m."
	Twenty nine million of our fellow citizens are in work. As my right hon. Friend the Member for West Dunbartonshire said, there were 21 million beneficiaries from last year's Budget—something that must be repeated. There are nearly 700,000 job vacancies and the unemployment claimant count is at its lowest since June 1975.
	We have had forecasts on growth; my right hon. Friend the Member for West Dunbartonshire referred to them, as did the hon. Member for Runnymede and Weybridge (Mr. Hammond). In conjunction with the hon. Member for Taunton, I thought that the hon. Member for Runnymede and Weybridge made an excellent speech from the Front Bench. It was a strong Opposition speech and he should be congratulated on it. We will not go into his facts or polemics, but the manner of the speech was worthy of the House of Commons and for that he deserves congratulations.
	The growth rate forecast by the Treasury is about 1.85 per cent. It may be that the forecast will go down to 1.5 per cent., but I remember being an Opposition Member and asking the noble Lord Lamont, as he now is, at that Dispatch Box whether we were in a recession. The answer was yes, we were; we had had three months of negative growth. We are not in a recession and we are not likely to go into one. We are holding the line in a very difficult and turbulent financial world.
	We read a lot about consumer confidence. The newspapers make a great thing about the loss of consumer confidence, but whatever the newspapers tell us—to get back to the hon. Member for Taunton and his diligence in reading newspapers—total retail sales in our country, including new floor space, were up in March on a year earlier. The rise was 1.1 per cent., while Tesco reported a 12 per cent. increase in sales in the past financial year. By the way, over the same period cash was used for 60 per cent of all retail sales, up from 54 per cent. in 2006. If we are moving away from a credit card economy to a cash economy, that is all to the good.
	The Chancellor said that the theme of the Budget was stability. We live in an unstable world and I shall not repeat all the arguments on the sub-prime mortgage crisis. I commend my right hon. Friend the Member for West Dunbartonshire on his excellent Treasury review report on the subject. We have moved over the last 10 years to economic stability and growth. We are faced with unprecedented turmoil in the financial markets, but in those 10 years of stability, we have been able to deliver real change in our economy.
	The national minimum wage, to which I referred earlier, has increased by 23 per cent. in real terms to £5.73 in October 2008, which has helped 1 million low earners, many of them women working part-time. We have lifted 600,000 children out of poverty since 1997 and action since the Budget of 2007 will lift an additional 500,000 out of poverty. Child poverty, which doubled in the 20 years up to the mid-1990s, has been reversed under the Government. What we can see is a strong economy underlined by great stability.

Stuart Bell: Clearly, rising food and fuel prices will trouble the economy, and the Government must look at those matters and deal with them as they can. Making changes to last year's Budget this year might not be the appropriate way forward. Instead, the appropriate way forward might be that suggested by my right hon. Friend the Member for West Dunbartonshire and the Treasury, which is to see how we might accommodate the changes being forced upon us by exterior events.
	The hon. Member for Taunton asked about the vision thing. There have been answers from the Labour Benches on the national health service and climate change, but the vision is also present in the Budget and the Budget statements. It is a value vision based on opportunity, fairness, efficiency and equilibrium between all strands of society. We are frequently coming across that vision. A reference was made to this being a managerial Budget. It was not managerial, but it was intended to accommodate a difficult financial situation and to be a steady-as-she-goes Budget—the words of Stanley Baldwin many years ago.
	There are difficulties, therefore, but within them there are also opportunities, and this Budget reflects those opportunities, as do the Labour Government. Our business is to maintain stability in our society in what is an unstable world, and this Budget does that. The measures announced today by the Bank of England, supported by the Chancellor, will assist that stability, and as time goes by we will see that the British public will come to understand that and will support us.

Eric Illsley: I am grateful to the hon. Gentleman for that and yes, I do agree with him. Attempts have been made to deal with the situation. One initiative aimed at rural pubs used the catchphrase "the pub is the hub". Some rural pubs were given post office counters and internet connections in an effort to attract people there to do business, and to retain the pub as part of the community by allowing it to go further than just selling alcohol. This is a big issue, particularly in rural areas, but even in urban areas pubs are closing at a drastic rate.
	I have referred before to sales promotions in supermarkets, so I shall not dwell on this point. We debated this issue in the House on 6 December, and I gave examples of supermarkets offering cases of beer at the discounted rate of three for the price of two, and three bottles of spirits for the price of two. In one instance, a 75 cl bottle of whisky was sold at £9.99, yet the 1 litre bottle was sold for £10—for an extra penny. It might interest Treasury Front Benchers to know that on the day of this year's Budget, supermarkets knocked £5 off the price of a bottle of spirits. So whatever the message that the Government were sending out regarding controlling or curbing drinking, the supermarkets cocked a snook at them on that one.
	Further such examples have been given in debates in the House. Budweiser sold beer to Morrisons supermarkets at £9.82 per case excluding VAT, and Morrisons sold those cases for £10—the same as, or less than, the wholesale cost. The supermarkets are taking the mickey out of the Government and ignoring any message that comes across on safe drinking by selling at a loss.
	In 1968, a can of Tetley bitter sold at the off-sales at a pub in, say, Yorkshire, where the Tetley brewery is located, for the equivalent of 79p. Today, a can of Tetley bitter costs about 55p. In February 1986, when, VAT was 15 per cent., a pint of Tetley bitter in a pub cost 68p. If we add 2.5 per cent. VAT to bring it up to the present rate and we allow for inflation, that prices rises to £1.51. Today, a pint of Tetley bitter is being sold in pubs in Leeds, for example, for between £2.40 and £2.50. Such is the cost to pubs of overheads and so on that they simply cannot compete with the supermarkets. Whereas a pint of Tetley bitter is £2.50 in a pub, it is 55p down the road in the Asda supermarket, for example. We are talking about a figure that is 59 per cent. higher than the retail prices index. This is the competition from supermarkets that pubs are having to deal with.
	How do the supermarkets get away with that, and how do they fund it? The answer is simple—part of that funding comes from us, the taxpayers. Through the VAT regime, the supermarkets can claim back some of the VAT resulting from such sales. For example, if a pub buys £200 worth of beer, it will try to sell it at a profit to cover its overheads. It pays £35 VAT on the £200 of beer and claims £17.50 back. A supermarket buying £100 worth of alcohol will sell it at £75. The VAT on that figure takes it to £88.12, so it is paying £13.12 in VAT but it claims £17.50 back, just as the pub does. However, the net contribution to the Treasury is £4.38, so the taxpayer is subsidising the supermarkets to sell alcohol at a loss. We are not claiming the full amount of VAT back. After taking into account VAT, the net loss to the supermarket on £100 of alcohol, which it sells at £75, is £20.60. It simply recovers that by increasing the price of goods in the non-VATable area, which, of course, is food. That is another reason why food prices are increasing.
	That is a rather clumsy example of how VAT works, but if we apply those figures to alcohol sales of some £50 billion in our supermarkets, which are avoiding VAT and requiring us to pay for it, we can see exactly what the Government are losing. If they addressed that fact and claimed some more VAT back off the supermarkets, we would probably not be having the debate on the 10p rate of income tax, as plenty of revenue would be coming in. Something has to be done about how supermarkets can avoid their responsibilities in respect of VAT and sell alcohol as cheaply they do.
	Another suggestion that has been mooted heavily is to rate supermarkets on the areas in which they sell alcohol on the same basis as pubs—in other words, on turnover, not square footage. The rate that would be paid by a supermarket on the section of it that carries alcohol would be higher than the rate for the rest of it, but on a basis equivalent to a pub.
	I turn now to an issue that is not covered in the Finance Bill, but which I and other Members think perhaps should have been: VAT on bingo participation fees. Some of my colleagues and I have been lobbying the Government for a number of months on the issue of bingo duty. Just as pubs are closing, so are bingo clubs. Nine have closed already this year, and some 57 closed last year. The bingo industry has made representations to the Government for a number of years regarding what it refers to as
	"the current system of double taxation"
	on bingo played in licensed clubs. Licensed bingo remains the only gambling product subject to double taxation, which results in an effective tax rate of 28.2 per cent., compared with 15 per cent. for most other gambling products. The industry believes that this is illogical.
	I can explain the situation very simply. If a Member of this House goes into a betting shop to put a bet on a horse, they are not charged an entry fee or required to pay anything to place that bet; they simply pay the stake over to the bookmaker, who takes it at a certain set of odds. If a person walks into licensed bingo premises to play bingo, they might be charged for entry or for the bingo card on which they will play the game, and anything that they buy within those premises will also be subject to a charge and to VAT. So bingo operators are subject to VAT and what is known as gross profit tax.
	In 2003, the Government chose not to remove double taxation from bingo. There are some 3 million bingo players at any one time; they continue to be disadvantaged by this system, and bingo clubs continue to close. Bingo is a soft form of gambling that appeals mainly to women, and all constituencies contain bingo clubs. Bingo should not be subject to this level of taxation. We should be encouraging safer forms of gambling, rather than promoting casinos and all the rest of it. I mentioned that there are 3 million bingo players at any one time, but I should also say that the total membership of UK bingo clubs is about 17.5 million people—that is an average of 30,000 members per club. If an hon. Member's constituency contains a Gala bingo club, the chances are that 30,000 people will be registered as members of it. My local club in Barnsley, Central has 26,000 registered members.
	The removal of VAT on bingo clubs would be cost-neutral to the Treasury because it would help to keep clubs open. The £75 million that the Government get from VAT on bingo clubs is countered by the loss of tax from other areas of revenue. The Bingo Association and the bingo industry are therefore saying to the Government, "You're allowing these clubs to close at an alarming rate, and you're losing the VAT and other revenues from them. If you waived VAT and stopped the double taxation, you would keep that VAT and you would also get other revenue from people paying tax on other aspects of the clubs."

Eric Illsley: The hon. Gentleman is right to say that that very technical issue would not require a derogation, because in order to levy VAT on bingo as we do, the Government apply a derogation to the existing European Union legislation. This issue is subject to a court case, known as the Linneweber judgment. I shall not go into that this evening, because it is extremely complicated and I would not want to bore hon. Members rigid by referring to it. In order to remove VAT on bingo duty, we would need an exemption from the exemption that we already have. The issue is complex, but it would not be difficult to remove VAT on bingo. As I have mentioned, the wider aspect is that the Government will lose revenue from the closure of bingo clubs, and our constituents will be deprived of a particular leisure activity.
	I mentioned that nine clubs have already closed this year at a potential cost to the Treasury of £5.6 million, which adds to the £25.9 million potential cost of the 37 clubs that closed last year—that already represents more than the tens of millions estimated by the Treasury. I hope that the Government will re-examine bingo duty as the Finance Bill goes through Committee. As I say, we have lobbied hard on this matter, from the Prime Minister downwards, to try to get some relief.
	My remaining comments will be about the 10p tax rate, which has been widely covered by hon. Members. I do not have much to add, except to say that I cannot understand why this Government, who have known about this for a year and have done the calculations, have abolished this 10p tax rate without realising the consequences. Like many hon. Members, I have been out campaigning in the local government elections and have been surprised by the representations that I have received on the doorstep, and by the number of letters and emails I have received about this matter. That is mainly because, like other hon. Members who made representations to the Treasury on behalf of constituents, I was assured that this would affect a small number of people at a very small level of income. As it is, that level of income is obviously very important to the people affected, because they are on low incomes, and I cannot understand why a Labour Government have simply not thought this through.
	I heard the Prime Minister saying on the radio today that nobody will lose out because of the proposal. My hon. Friend the Member for Middlesbrough (Sir Stuart Bell) also suggested that nobody would lose out, and that the 5.3 million people could be wrong. People do not agree with that view. They do not see the wider picture, and that perhaps their allowance has gone up in some way and perhaps the winter fuel payment will compensate them in another way. They see an increase on their tax assessments and a reduction in the money coming into their households each week. They perceive that they are being taxed by this Government even though they are the lowest paid in our society.
	The Government must overcome that perception. Saying that we will have a review starting for the pre-Budget report in November simply will not wash with anybody. It will not wash with me, because I do not agree with that approach. I want the Government to re-examine this matter and come up with something substantial rather more quickly than that to alleviate my constituents' concerns. The only sensible option produced so far in this debate was put forward by my right hon. Friend the Member for West Dunbartonshire (John McFall), the Chair of the Treasury Committee, who said that his Committee will re-examine the issue. The Government must re-examine it otherwise they will be labelled as the Government who are taxing the lowest paid in our society while at the same time making concessions on inheritance tax and capital gains tax for venture capitalists. I urge my hon. Friends to look again at this issue.

Graham Brady: I am grateful to the former chairman of the Altrincham constituency Labour party for making that point; he may return to that role in the near future. He makes my point for me, because the Budget, and the Finance Bill that seeks to implement it, demonstrated a continuation of business as usual; the same procedure and approach that we have had over a number of years rolled on. Precisely what it failed to do was to respond in any significant way to changed circumstances.
	The underlying assumption of the past 10 or 11 years is that a high tax burden is sustainable and that the Government can keep taking money out of people's pockets and it will not hurt and people will not object. The assumption is that that is true for individuals and for companies. We are now starting to find—the story is the same from Labour Members—that such taxes are becoming much more difficult to justify in the difficult circumstances pertaining today when people are up against the credit crunch and worried about whether they can pay their mortgages or whether they will be in stable employment in one or two years' time.
	The only obvious concession to a new and more difficult economic situation was the six-month delay in the implementation of the fuel duty increase. That is a welcome recognition of the fact that fuel costs are rising for families and businesses, which is creating a competitive problem for UK hauliers, many of whom are competing against continental competition from countries that do not impose such high levels of fuel duty. However, the Budget was not clear about why the duty rise would have been unacceptable now. If it is because of the overall effect on costs for families or businesses, how will the Government respond if the same, or worse, circumstances appertain in October when they intend to proceed with the duty increase? People need some clarity on whether the Treasury accepts the principle that the costs in UK industry should not be levered up, creating an increasing competitive disadvantage for British businesses. Or was the delay just a response to short-term pressure and intended to get the Chancellor off the hook? Do the Government accept the principle that families are hurting because they have to pay increased fuel costs every week when they fill up their cars' fuel tanks, or was the delay just a short-term fix to put off the moment of reckoning?
	The same question arises in relation to the abolition of the 10p tax rate. It is welcome that Labour Members are starting to recognise that taxes cannot be increased again and again without consequences. For 11 years, taxes on all our constituents have increased dramatically. The pain has been mitigated, in many cases, by significant increases in salaries, easy credit, and rising house prices, which have given people a sense of security. It has also been mitigated by the hugely complex system of tax credits, which has reduced the impact on some groups of people.
	In proposing the abolition of the 10p rate of income tax, the Chancellor—or perhaps it is the Prime Minister—has belatedly discovered the joy of simplifying the tax system. That is welcome, but simplifying taxes when raising or maintaining the overall burden of taxation means that there will inevitably be losers as well as winners, which has also been demonstrated in the changes to capital gains tax. The drive towards simplification is welcome, but it has been necessary to introduce mitigating measures, such as entrepreneurs' relief and the transitional arrangements, because of the damaging effects—some of which were unintended consequences—on some people.
	With both the capital gains tax regime and the abolition of the 10p rate, I hope that a new understanding is developing on both sides of the House that there is a limit on how much it is fair or sensible to tax people, and that that limit has been reached if not exceeded.
	Much has also been said about how proper consultation could have helped on the capital gains tax issue. That brings me to my final issue, because I wish to congratulate the Treasury on its sensible and detailed consultation on the proposed tax change to aviation duty. The changes will come into effect in autumn next year, but the paving measures are in this Finance Bill. The intention is to move from air passenger duty to aviation duty. The consultation document released in January was a serious and thorough exploration of the options and some of the difficulties arising from the proposal. I suspect that by now, with the consultation drawing to a close on Thursday of this week, Ministers will have begun to arrive at some conclusions. It will be clear, for example, that applying aviation duty to freight could lead to significant problems for the UK air freight industry. It could lead to significant job losses, especially in some parts of the country, such as the area around East Midlands airport. It could lead to the diversion of air freight from UK airports to near continental airports, and that will not save any emissions. Instead, it will increase road haulage and the environmental impact caused by the transhipment of freight by road. It will also transfer thousands of British jobs to other EU competitor countries and that will clearly not be beneficial to the British economy.
	The document also goes into sufficient detail about some of the other difficulties that might arise. The first obvious answer is to exempt freight-only flights, but not all flights carrying freight are freight-only flights. Passengers and freight are often carried on the same aircraft.
	The second conclusion that is difficult to escape is that applying a distance criterion to aviation duty discriminates in favour of short-haul routes and against longer haul routes. Short-haul routes tend to give rise to the most emissions, which are concentrated during take-off and landing. Therefore, mile for mile, applying a distance criterion has a perverse effect.
	Thirdly, the inability to apply the charge to movements other than those that originate at UK airports would encourage the use of aviation hubs outside the UK. All the same aviation would take place, so there would be no environmental benefit. People would take short-haul flights from UK airports to Schiphol or Paris to transfer to their long-haul flights. All that that would achieve is to damage Britain's strategic economic interests by undermining UK hubs.
	Fourthly, the duty could have a damaging effect on regional airports. It could therefore increase the pressures on and congestion at Heathrow and other airports in the south-east of England.
	Fifthly, an upfront charge, unrelated to demand and the number of people on board a flight, would make it much harder to establish new long-haul routes from regional airports. I have a particular interest in Manchester airport, which is very close to my constituency. When long-haul services from regional airports are established, they often depend on relatively low volumes of use in the early stages, and putting a charge on the flight when the service is first inaugurated could render them uneconomic and uncompetitive, and might also lead to a diversion of traffic to the more congested airports in the south-east.
	Sixthly, basing the duty on the maximum take-off weight of the aircraft provides no incentive to invest in cleaner aircraft. Furthermore, while the shift to a duty based on air movements rather than passenger numbers is superficially attractive, the change could lead to higher emissions rather than lower emissions for all the above reasons. Given that the whole of aviation will, we hope, be included in the European emissions trading scheme within a relatively short period of time—that ought to cover the environmental costs of the industry—we are not talking about a provision that will have an environmental benefit. In fact, the new tax might defeat many of the objects that it purports to achieve.
	Finally, the proposals might actually breach international law. They might be contrary to the Chicago convention and the EU-US aviation agreement. For all those reasons, I hope that the Government will learn something from the numerous problems in their application of tax policy and tax changes in recent months. I hope that they will reflect on the fact that where they have not consulted, they have come unstuck. They have had to engage in some embarrassing changes in policy. They have had to execute some U-turns and have looked unprofessional and unco-ordinated in doing so. When they have engaged in some consultation but have not taken proper account of its findings, they have had further difficulties.
	In this case, the Government are consulting. They have given themselves a reasonable time period. They do not need to finalise the details of the duty regime until this autumn in order to give the 12 months' notice that they have promised the industry for implementation in November 2009. They have time to think again and to consider the implications of what they are doing. I strongly urge them to do so.

Brian Binley: It is a pleasure to follow the hon. Member for Dumfries and Galloway (Mr. Brown), who always speaks with care on behalf of his constituents. I am sure that many of them would listen to his concern about fuel prices, which is shared by many Members.
	I was disappointed earlier at the words of the Chief Secretary to the Treasury. Given that she represents a Yorkshire constituency, I would have thought that she would have known a little more about how to judge a wicket. It seems to me that she was on a particularly sticky wicket today, and I expected her to respond accordingly. However, my judgment of her words was that she thought that the wicket would take a bit of spin, and I found that disappointing.
	I want to talk about what is missing from the Finance Bill and what should be put in on Report. I want to concentrate on three issues: the rising costs of regulation faced by business generally; the increasing tax burden borne by small and medium-sized enterprises, particularly small ones; and the personal debt faced by many of the poorest in our community, for whom the cutting of the 10p tax rate will cause considerable hardship.
	I have spoken about regulation on a number of occasions and the issue is well rehearsed among many other Members. It is almost a truism now to say that the cost of regulation is hitting business hard. Much of that regulation is increased tax regulation, with which the Bill is particularly concerned. The Chancellor's inability—or unwillingness; call it what you will—to simplify that tax burden for business generally is a sizeable omission. I do not need to repeat that the British Chambers of Commerce recognises that the cost of regulation under this Government has now risen to £66 billion—a massive burden for business, given the global challenge that is emanating from Brazil, India and China. In addition, the statutory instrument statistics of 2007 made it clear that 14 new regulations were enacted by the Government every working day. Many of them impact on business. Finally, the Federation of Small Businesses said that, on average, small businesses spend seven hours a week on red tape and paperwork.
	Those are tremendous burdens on a business economy to which we are looking to provide the real challenge on which our children and grandchildren will rely for their well-being in 20, 30 and 40 years' time. This House does not often think in terms of such lengths of time, but it behoves us to do so. Otherwise, we shall find our decline down the table of well-being continuing and accelerating. I find that a fearful prospect.
	I do not need to talk too much about the need for tax changes because the Treasury Committee report on the 2008 Budget made that plea on a number of occasions. I could read them out, but I do not think that you, Mr. Deputy Speaker, would want me to do so, given that time is limited. However, the Treasury Committee grabbed on to the fact that we need to simplify our tax system and get burdens off the backs of businesses, particularly small ones.
	The National Audit Office looked at small businesses in 2006. I have not seen any changes as a result of that audit, although the Government should have taken notice and created change. That is a fine example of how the Government, in my humble opinion, are going wrong. The National Audit Office said that the monitoring regulations for small schemes were not well developed and that there was no assessment of the impact of Small Business Service expertise on the development of regulation. Indeed, the Government went on to argue that they would cut the number of small business support schemes from the estimated 3,000 in existence at that time to 100.
	Way back in March last year, I asked the Treasury how many schemes had been cut, how many had been consolidated and how many were in existence then as a result of the reduction. Secondly, I asked what assessment had been made of the effectiveness of the schemes, but I am afraid that I got no answer. I tabled a written question on the issue on 3 April this year, which means that I was due an answer this morning. Sadly, I did not receive an answer to the important question of how many schemes have been reduced, how many are now in existence and the Government's assessment of their effectiveness. My guess is that I will not receive an answer, although I hope that the Minister will give me it tonight. Unless the Government effectively assess what they do, they cannot do anything effectively; the premise is simple. My concern about the Bill is that nothing in it tells me that the Government are properly assessing. I shall talk more about that in a little while.
	I move on to taxation. I can say from my own experience that the business sector is not getting the message that the Government are business friendly. In fact, it is becoming increasingly concerned about the Government's attitude when it comes to real measures rather than words. There has been a capital gains tax increase from 10 per cent. to 18 per cent.—an 80 per cent. increase. I welcome entrepreneurial relief, but many entrepreneurs are still being put off from starting, developing and growing businesses. We need to recognise the impact of such increased taxation on small businesses particularly. What assessment has been made of that increase and what effect do the Minister and the Government generally feel that the increase will have on small business start-ups and on the businesses that might leave these shores as a result of increased taxation? Capital gains tax plays a particular role in that respect. It is estimated that the Exchequer will yield from increased capital gains tax £250 million in 2008-09, £300 million in 2009-10 and £500 million in 2010-11. However, it does not seem to assess what the cost impact will be in real terms. If it does, I will be happy for the Minister to prove me wrong later, but I bet that I do not get a proper answer.
	An example of the impact of Government thinking on small businesses is that of income shifting. Many small businesses run by husband and wife teams will recognise the value of consultation undertaken by the Government after due pressure and will be equally pleased that this measure has been put off until 2009, but there is fear about the bureaucracy that will be enacted at that time. Anybody who has been involved in a small business and knows about the impact of such bureaucracy will understand that fear. It will mean all sorts of double accounting for husband and wife teams.
	My main concern, however, is that the Government seem to believe that every small business is out to twist the taxman. That is the impression that they give. One need only read what the Chancellor said in his Budget speech to recognise that that was the underlying theme of this move. The truth of the matter is that most people in small businesses are, frankly, too damn busy—I apologise if that is unparliamentary language, Madam Deputy Speaker—earning a living and creating and developing their businesses to have the time to think about dishonesty with the taxman. In fact, they are quite fearful of the taxman and want to be honest because they do not want him on their backs. I do not understand why the Government think that small businesses are out to cheat them. Again on assessment, it would be nice to know what is the economic advantage to the Treasury. Has that figure been worked out? Are we putting a massive burden on small business generally for very little return to the Treasury simply because this Government do not trust business? If so, business knows the answer and will know how to act.
	Let me conclude by talking about the impact of personal debt, particularly among the very poorest in our society. I quote from a document that states:
	"The Bank of England has estimated that around half the people who describe debt as being a "serious burden" are from a low income group...People living in housing provided by local authorities or housing associations are more than twice as likely to have been in debt than the average person...Debt and a number of other serious social problems are interdependent on each other both in terms of cause and effect...Those out of work are more likely to have experienced serious personal debt problems...Those who left school early, or came from single parent families, or whose parents were unemployed are more likely to have been in debt."
	There is a massive debt problem for people at that level; I do not want to talk about loan-sharking today, but that has an impact. It is all about weekly cash flow, and the problem is that the Government's proposals will affect that. There lies the hidden problem that they have not understood. I wonder whether they have assessed the impact of that weekly necessity to repay debt and how that relates to the abolition of the 10p tax rate. If so, perhaps the Minister will tell me what it is. That is a serious matter that has not been considered and needs to be.
	The Budget, as represented in this Finance Bill, has not helped many sectors of the community. It has created massive concern for home owners, as indeed has the Prime Minister—the previous Chancellor over a period of years. It has brought despair to would-be first-time buyers, because there was no help for them. It has turned off entrepreneurs and depressed business managers. It has made the poor poorer. Sadly, all this is from a Minister who has bailed out bankers who have caused their own problems, and caused problems for this country, by not only allowing increased personal debt but by acting in the most irresponsible manner imaginable. There are parameters to controlling any sector of business, and by golly there is an immediate need to look at the finance sector.

Stephen Hesford: The hon. Gentleman's memory is short. During the 10 years that my right hon. Friend the Prime Minister was in post as Chancellor, there were a number of pauses in the global economy, to say the least: the dotcom collapse, the Asian collapse and American problems in the early 2000s. One of the only economies that survived and prospered was this one. The Chancellor was entitled to take some credit for the stability and growth that this Government brought forward from 1997.
	The hon. Member for Tatton, having said that the credit crunch could not have been foreseen, and having claimed that we should have foreseen it, said that we cannot rush to judgment and that not every problem
	"needs a new law or piece of regulation."
	He went on to say that to survive the credit crunch, we must change the rules. Which is it? Does he say that all is well, or does he think that there ought to be intervention of the sort mentioned earlier by my right hon. Friend the Chief Secretary?
	Following that article, the hon. Member for Tatton made a speech at the Policy Exchange on 14 April attacking my right hon. Friend the Prime Minister, saying that his economic legacy had collapsed. He referred to the "three pillars" of my right hon. Friend's economic policy collapsing. That would be a damning indictment if it were accepted by serious commentators in the economic field. When I heard the hon. Gentleman make his speech, I asked myself where this idea of three pillars collapsing came from. Lo and behold, the day before, Lord Lamont had also written an article, for  The Daily Telegraph. No doubt the right hon. Member for Witney—who advised Lord Lamont at a particular time in the life of the previous Government—and the hon. Member for Tatton had got their heads together on the Policy Exchange speech because Lord Lamont said in his piece of 13 April:
	"Contrary to what the Government have been saying, the UK is not well positioned to withstand this crisis. Whether it be the rise in house prices, mortgage debt...or personal indebtedness".
	That is the line that many papers have run, probably for a month or more. If those were the facts, they would be quite worrying to my constituents.
	I have set out how what the Opposition are saying is opportunistic and contradictory, but it is also wrong. The case made by Lord Lamont is simply wrong. Why do I say that? Ruth Lea, a well-respected economist, but no friend of the Labour party—she never has been and never will be—used to be the finance director for the Institute of Directors, and she contradicted Lord Lamont and the hon. Member for Tatton when she said, very recently, that the British economy was very well placed to withstand the credit crunch in terms of stability. She said that that was the case for three reasons: low interest rates, in contradistinction to circumstances when other credit crunches caused severe recession, pain, negative equity and so on; low inflation; and high and improving levels of employment, a point made earlier by my hon. Friend the Member for Middlesbrough (Sir Stuart Bell)—we now have record employment. Those three factors were completely absent in 1991, 1992 and previous recessions.
	As for other economic commentators, in case there were any doubt about whether the economy is in good shape to withstand the credit crunch, David Smith said last week in  The Sunday Times:
	"If you are in America, with barely any growth, or Italy, with today's election being fought in an economy predicted to grow by only 0.3 per cent., things feel grim...As for Britain, the IMF's forecast of 1.6 per cent. growth for this year and next is stronger than America, plainly, but also outstrips Germany, France, Italy and Japan."
	He went on:
	"It may not be a great prize to win, but over the next two years Britain will vie with Canada to be the strongest-growing economy in the G7."
	That does not fit the description of a country that is acutely vulnerable to the credit crisis.
	David Smith's final point shoots the fox that some newspapers and Opposition Members have been trailing for the past month or so. He comments on the circumstances of credit crunches and squeezes in the past, and analyses three or four previous examples. In summary, he says that, on each and every one of those occasions, the credit crunch lasted for a certain period and was then over, with the economy back on an even keel. He measured three previous credit squeezes as lasting between six and 18 months. He said that we are already seven months into the current credit squeeze, which began roughly in August last year, and, unless those previous historical circumstances—I am talking not about pre-history but about events in the 1990s, 1980s and 1970s—are completely different from our position now, he guesstimates that we will get through it very soon or a little later.
	David Smith therefore says that there are two sets of circumstances. First, the economy is in good enough shape to withstand whatever the credit crunch throws at us, contrary to what Opposition Members argue. Secondly, even if we are more vulnerable, only some months are left, hopefully.  [Interruption.] The hon. Member for Northampton, South laughs. Does he wish to intervene?

Stephen Hesford: Of course it is uncomfortable, but a Lord Lamont-style rant, which talks down the situation for political gain and makes it appear worse, for political purposes, than it is, will not help. I exempt the hon. Gentleman from my opening remarks, because he has a genuine interest in the small businesses about which he spoke. However, it does not help those small businesses to talk up the credit crunch or talk down the economy—the real economy. David Smith also says that some of the conversations about the credit crunch are divorced from the way in which the real economy works. The small businesses about which the hon. Member for Northampton, South speaks can prosper in and take succour from the stable economy, unbroken since before 1997. The business people whom he forcefully represents want that sort of climate and will prosper in it.
	When considering the removal of the 10p tax rate, we must examine both the proposal itself and the global circumstances in which it is being discussed. Members of all parties refer to the Institute for Fiscal Studies. One of its leading economists said that there are basically three solutions and that, in simple terms, two are simply not affordable. The one that is left is to mitigate the effect on the so-called 5.3 million. The effect cannot be reversed, as the Opposition suggest, but mitigated. Labour Members have pointed out the problem with mitigation, but we have received no help from Opposition Members, who refuse to say what they would do instead. The problem is that several separate components of the electorate are differently affected by the removal of the 10p tax rate, so that mitigation for one sector might not assist another. The House must consider that seriously. My right hon. Friend and neighbour the Member for Birkenhead (Mr. Field) may table an amendment to try to address the mitigation aspect, but could fall into the trap of not dealing with the matter for every one of the 5.3 million. We should not, as the hon. Member for Tatton said about a different matter, rush to judgment.
	What is to be done? My right hon. Friend the Chief Secretary said that the matter would be considered. The Treasury Committee suggested that that could be done in conjunction with it. That may well be a sensible option. However, the matter is much more complicated and serious for the people whom we are considering than we have explored with Opposition Members, unless the hon. Member for Fareham can tell us what he would do in place of removing the 10p tax rate.

Stewart Hosie: I am pleased to follow the hon. Member for Wirral, West (Stephen Hesford), who provided a cheery, upbeat assessment of the economy. I would hate to hear him when he was miserable. However, let me get rid of the delusion that he presented—the denial in his speech and the making light of the credit crunch. The Chancellor told us earlier that he would give the banks £50 billion in Treasury bills in return, at least in part, for US credit card debt; there are tens of billions of Treasury bills in Northern Rock now; there will be £581 billion of cumulative deficit next year—that is in the Red Book, as is next year's £43 billion of debt, and there will be £189 billion of private finance initiative liability, most of it off balance sheet. When the hon. Gentleman talks about the "real economy", he should remember that we have lost a million manufacturing jobs since Labour came to power, and that there is an £87 billion balance of trade deficit in goods and £1.3 trillion of personal debt. We all want to talk up the economy, but let us do it on the basis of—he is a Labour Member and will understand—objective reality. His speech contained no reality.
	On Budget day, I described the Chancellor's speech as a speech from
	"a Chancellor who had no room to manoeuvre."—[ Official Report, 12 March 2008; Vol. 473, c. 345.]
	The clearest indication that we have had of that limited room for manoeuvre is the detail in the Bill, which is another smash-and-grab raid. The Government will take £2 billion extra from business, including £200 million extra from business in Scotland, in the next three years. I will come to the detail of that, but there is also the abolition of the 10p rate. I do not want to claim credit for being the first person to notice that in last year's Budget, but I should like to put it on the record that I mentioned it in my speech on Budget day.
	The Finance Bill sees the Government scrambling around for every penny that they can get from business and people's pockets to plug the holes in the books. I have outlined some of those holes to the hon. Gentleman and will return to them later. The Bill also takes its lead from policy decisions in the previous Budget and the pre-Budget report, which the CBI estimated would take some £5 billion from business, straight into the black hole of the Exchequer. That is the clearest indication that, after 10 years of relatively benign international conditions, relatively stable if unspectacular growth and reasonable inflation, there is nothing left in the tank. Debt levels are far too high and there is no cash reserve to allow the Government to do what is necessary to stimulate the economy when the downturn comes.
	Ministers have said that there is stuff in the Budget and the Finance Bill for business, but where are the measures genuinely to increase investment in research and development? We know that such investment is relatively low in the UK, at about 1.8 per cent. of GDP, as I have said before. Our main competitors have a higher rate, and in Scotland the figure is very low indeed. The Government have done little in the Budget or the Finance Bill to assist R and D. Ministers may point to the small and medium-sized enterprise R and D tax credit increases, as well as the general R and D tax credit increases, from previous Budget measures. That will cost the Exchequer some £70 million this year, and that goes to business; however, that is taken away from business, in yield to the Exchequer, either by the changes to the integral fixtures capital allowances, which will bring in £70 million, or the first year of the phased abolition of the industrial buildings allowance, which brings in £75 million. There is therefore no net gain for business from doing the R and D that they want, and they will have to find the cash to pay for those outgoings.
	By increasing taxes—the small companies rate of corporation tax in particular—and refusing to consider proposed changes to capital gains tax, the Government are taking more tax from business at a time when they are making it potentially more difficult to secure investment. I am certain that those measures will worsen the situation in manufacturing, which has seen 1 million jobs lost in the UK since 1997, including 100,000 lost in Scotland and 34,000 lost since 2002.
	Making it more difficult to raise capital and increasing taxes for growing companies, particularly when they are struggling to meet spiralling energy, transportation and raw material costs, will worsen the balance of trade problem. We are talking about an £87 billion deficit in our trade in goods and a £70 billion deficit in our overall balance of trade, which is up £10 billion from £77 billion in the past full year. That deficit affects our ability to grow GDP. Since 2000, we have seen a suppression of GDP of around 0.25 to 0.5 per cent. every year. That means that UK GDP has grown by £30 billion less than it would have, had trade been in balance, which equates to about £1,000 per household. That is another matter that should have been addressed in the Budget and the Finance Bill, but which has not been.
	The Chief Secretary also argued that the Finance Bill was a Finance Bill for the environment—that was when she was actually talking about the Bill. I am not sure whether the Government are right about that. The Bill will defer the April rise in fuel duty until the autumn, which is to be welcomed, but from next year there will be a 1.84p per litre rise and a 0.5p per litre rise above indexation from 2010, as well as a swingeing new vehicle excise duty regime.
	My hon. Friends and I have no objection to using price to discourage unnecessary journeys, to encourage public transport or to encourage freight off the roads, which everyone in the House agrees is sensible. However, many of the Government's measures ignore the fact that so many journeys, of both people and freight, are wholly necessary and that in many areas there is often no alternative. With the Government already taking in excess of 60 per cent. of the price of a litre of fuel in duty and VAT, it remains outrageous that, when there is a windfall, particularly in VAT, and when there is spiking of prices at the pump, that money is not used to moderate the price of fuel.
	I hope at some stage to be able to table amendments to the Bill to do a number of things. The first would be to introduce a fuel tax regulator, in order to use the VAT windfall, first to help generally, secondly to assist remote rural areas, and thirdly and most importantly —I hope that this will command support—to assist the road haulage industry, which is being hammered and is even contractually unable to pass on the fuel prices it is having to pay.
	The second thing that I would like is for the Government to reconsider possible exemptions for working 4x4 vehicles from the new high rates of VED. The Chief Secretary said that growth is continuing, but at a much lower rate than previously forecast. The impact of the lower growth is that Government receipts are forecast to be down £1.2 billion from the pre-Budget report. That did not stop the Chancellor, like his predecessor, from boasting about growth in the UK economy. However, it is worth reminding ourselves —particularly the hon. Gentleman, who believes that this is the best of all possible worlds—that average growth in the OECD has outshone that of the UK in half of the past 10 years and that low-tax economies such as Ireland's have outshone the UK every year since Labour came to power.
	As ever, the Chancellor, like his predecessors, ignored the quarterly downturns in the Scottish economy and the many low and flat growth quarters under the Government's watch. Indeed, average growth in Scotland has been 30 per cent. lower than in the UK over the past 25 years, yet there was nothing in either the Budget or the Finance Bill to assist.
	One of the few areas where the Budget indicated revenue growth was from the North sea. There was an increased tax yield from the North sea, which was based on an average price at the Budget of $83.60 a barrel of oil, which is an increase on the $68 a barrel forecast in the pre-Budget report. As I pointed out at the time, four out of the five closing prices for oil in the week running up to the Budget were record closing prices. The price on Budget day was $94 a barrel, but it has now smashed through the $100 a barrel price. It is worth noting that the Budget forecast £56 billion in revenues over the next six years, as compared with £38 billion over the previous six-year forecast. That massive windfall alone should act as an encouragement for the Government to consider how we might deploy some of the extra revenue generated for a fuel tax regulator, to help people in remote rural areas in particular and the road haulage industry.
	Many Ministers and Government Back Benchers—the ones loyal to the Government, that is—have argued that the Finance Bill was a Bill for stability. Obviously the Budget was so dull and the Bill so appalling that the only watchword that they could come up with was "stability". However, the Bill and the Budget will not provide stability. They are designed to do one thing: to fill the holes in the UK books. There was £37.6 billion of debt, with £43 billion forecast for next year. There was a cumulative debt of £541 billion last year, with a debt of £581 billion forecast this year. The PFI liability last year was £179 billion, with £189 billion of PFI liability this year, for—from memory—only £60 billion of capital projects. That is why our First Minister, my right hon. Friend the Member for Banff and Buchan (Mr. Salmond), described PFI as hyperexpensive and a hyper-waste of money. We need to do something about that, and very quickly.

Stewart Hosie: That is absolutely right, and the same argument applies to the new annual allowance. That is why we in Scotland are delighted that the Scottish National party Government have either slashed or removed the business rates for 150,000 small companies. That is something that we wish could be done down here to benefit similar businesses.
	The Finance Bill also offers us the extraordinary decision to put 59p on a bottle of whisky. That decision has the potential to damage one of the most successful industries at home. It is an industry that generates £2.5 billion surplus to the UK balance of trade. It is one of the few success stories in terms of real exports and real balance of trade surplus. The decision might also damage the industry abroad. When whisky manufacturers, companies, marketers and wholesalers go abroad to argue the case that another country has a discriminatory regime against Scotch, those other countries could turn round and say, "So what? Your Government are doing the same thing."
	I hope that the Government will consider undertaking a proper review of this matter, not necessarily to exempt Scotch from the duty rises this year—although that would be most welcome—but to look again at whether alcohol could be taxed on an equitable basis across the board. The tax, whether it be on wine, beer, cider or spirits, should be levied on the basis of the alcohol content. That would create an absolutely level playing field, irrespective of the type of alcoholic drink.

Stewart Hosie: The hon. Gentleman is absolutely right about the supersized wine goblets. I have seen them, and I bet that each glass could contain half a bottle. Obviously, he and I would take all night to drink that amount. I have seen these glasses being presented, but I have always declined them— [ Interruption. ] Mostly, anyway.
	My proposal would also address another problem. Super-strength cider is also taxed at a very low rate at the moment, and very strong lager is cheaper to buy than bottled water. My proposal would help to address social issues such as binge drinking and the crime that is associated with it, and I hope that the Treasury will take this matter on board. That is not a partisan point and I will not be calling for swingeing reductions, but I do want an investigation into whether the equitable taxation of alcohol by alcohol—irrespective of drink—could be delivered.
	We know that fuel price inflation is about 19.5 per cent. and food price inflation more than 6.5 per cent.

Stewart Hosie: It is utterly unsustainable for people in my hon. Friend's constituency and in other remote rural areas throughout the UK. We cannot have parts of the UK paying 33 per cent.—a third—more for a litre of diesel or petrol, which is quite extraordinary. The impact in some remote rural areas, where it happens to be particularly cold among other things, is even worse; the hon. Member for Dumfries and Galloway (Mr. Brown) referred earlier to heating fuel—another issue that the Government must look into.
	Thus, with fuel inflation nearly 20 per cent., food inflation more than 6 per cent. and filling up the tank costing an absolute fortune, what was the social provision in the Budget, feeding through to the Finance Bill? For the first time, we saw child benefit for the first child rise by only 70p and the second child by 45p. I know that it is planned for it to rise to £20 in future years, but when the Minister sums up, I would be grateful if she would explain where the Government intend it to go. Those annual rises—a tin of juice or a packet of crisps for the second child—are really very low. Likewise, the extra £50 winter fuel allowance is welcome, but I am already talking to pensioners who are saying that that amount has been gobbled up already. I hope that at some point, the Government could commit either to making the allowance permanent, which it is not at the moment, or, better still, to rolling up lots of these allowances and delivering a proper living citizen's pension.
	I will finish where many of us started—with the abolition of the 10p starting rate. We know that it will be to the detriment of about 500,000 Scottish households in which people earn very little. We know that it is the wrong thing to do, particularly in the light of rising inflation for the necessities of life.

Stewart Hosie: I recognise that abolishing the council tax would bring about not only a redistribution, but the largest tax cut for a generation—and almost everybody would benefit from it.
	It is important that we do not play politics with the 10p rate; I want to finish with a constituency case. A lady came to see me on Friday with her husband. She was very upset, having been forced to take early retirement due to ill health. She had not chosen to do so, but was forced to do so. She could simply no longer work. She received her slightly smaller occupational pension, but was not yet at retirement age, as a consequence of her ill health. She told me that her tax has now gone up, but because she had not quite reached retirement age and her husband had budgeted for working until retirement, they still faced many large monthly expenditures, particularly the mortgage that they had had for some time. What do I say to that constituent? How do I explain to her that the Government have put up her tax in order to benefit people like myself. That seems wholly unfair and wholly unnecessary.

Graham Stuart: If I may, I shall make a little more progress before I give way to my hon. Friend, who I know will have trenchant remarks to make, not least because of the challenges faced by his constituents in Peterborough.
	Imagine my pride when I found myself in Washington DC last week, discussing climate change with various senators and congressmen on the hill. I knew that my Prime Minister was coming, and Pennsylvania avenue was closed, the bunting was out and people were lining the streets. Unfortunately, after a while I realised that it was not for the visit of the Prime Minister but for that of the pontiff. I realised that the Prime Minister's great relaunch from his troubled Government at home had been completely mis-timed.
	Of course, the Prime Minister's lack of timing is particularly relevant to the Bill, because it comes just when my constituents are finding it hardest to make ends meet, facing high council tax rises—it has doubled under this Labour Government—and seeing their fuel costs going through the roof. Many of them are shift workers in Hull, having to travel from rural Holderness into work each day, and they are finding the costs enormously hard to bear. Just at this time, when so many people—the very backbone of this country—are struggling most to make ends meet, the Prime Minister decides to hit them with an increase in taxes.
	Lack of timing is in many ways the Prime Minister's weak point, as equally is his inability to take responsibility. It was almost comical when he was asked—in the United States, I think—about selling gold at the lowest point in the market for decades, why he had done this and whether he was responsible. He said no, he was not—it was the fault of the previous Conservative Administration. This is a man for whom denial is some kind of speciality.
	The Prime Minister, as Chancellor, came before the Treasury Select Committee and was asked about the change to the 10p rate. One of my hon. Friends asked him to explain to the Committee why, if the economy is doing so well, low earners should lose out. He said:
	"I do not accept your conclusion about low paid workers",
	suggesting that they would not lose out in the end. When asked again about those who would lose out under the change, the then Chancellor said:
	"At the end of the day I do not think we will see the effects that you are saying".
	There was the report of the meeting of the parliamentary Labour party on 1 April—I would be grateful if Labour Members intervened on me about this—at which the Prime Minister was rightly challenged by Labour Members about the impact of the abolition of the 10p rate. He responded by pointing out that no one would be less well off as a result of the 10p tax rate abolition stated in his last Budget. If the right hon. Member for Oldham, West and Royton wants to intervene, perhaps he can share with the House whether that incident took place. Clearly, no one wants to get to their feet. I think that we can conclude from that that the Prime Minister did in fact say that no one was going to lose out—in complete contravention of the truth. I now give way, as I promised, to my hon. Friend the Member for Peterborough (Mr. Jackson).

Stewart Jackson: I thank my hon. Friend for giving way. Does he share my concern at the lack of the Government's contrition about the fact that, because of their fiscal policies, they are forcing more of the poorer working people to pay taxes, and at the same time more than 5 million people are on some form of welfare? Their uncontrolled, unfettered immigration policy has meant that more people who want to work in this country are being forced on to benefits.

Graham Stuart: My hon. Friend is of course absolutely right. So little of the benefits of job creation over the past few years have gone to those who voted for this Labour Government in the hope that they would provide benefits to them—benefits in the form not of a giro cheque, but of the sustainable work and employment that I know my hon. Friend's constituents would like to see.
	It is noticeable that when the Government were riding high in the polls last year, Labour Members—with a very few honourable exceptions—seemed strangely indifferent to the impact of the abolition of the 10p tax rate on the working poor. It is interesting to note that the re-awakening of the Labour party conscience has coincided with plummeting poll ratings and the realisation that many Labour MPs could lose their seats. In preparing for this debate, I decided to look back at last year's Finance Bill debates. Again, with just one honourable exception, there was barely a mention of the Government's decision.
	Britain's families are hurting. They are hurting every time they fill up their cars; they are hurting every time they go shopping; they are hurting every time they receive their council tax bills. They are hurting from a constant barrage of price rises and tax increases. This Budget hits ordinary families up and down the country—people whose only luxuries are having a couple of pints on a Friday night, and who are seeing the price go up, and a week's holiday in the summer.
	On Saturday, I held my normal street surgery in Withernsea, and Joan Kaye came to speak to me about the price rises. She said, "How am I supposed to make ends meet when my income tax is going up from £22 a month to £41 a month?" Her council tax is going up by £5 a month, and her gas and electricity is up by £36 a month. She has at least £60 extra a month to pay out and cannot survive.
	Another constituent e-mailed me this morning, saying:
	"I would like to voice my objection to the abolition of the 10 per cent. tax band. My husband has had to leave work with Alzheimer's...he is 61 and has been retired 2 years. This year I have given up work to be with him."
	Their two pensions take them just out of benefit, and they find that they are worse off. These are the people who are being hit by this Government's attack on the hard-working and those who retire early, often because of illness.

David Chaytor: It is a pleasure to follow the hon. Member for Beverley and Holderness (Mr. Stuart), although I was deeply disappointed that in his passionate espousal of the cause of the working poor he was not able to remind us what the standard rate of income tax for the working poor was under the previous Tory Government and at what level of earnings that 23p standard rate of income tax kicked in. Before we progress this debate, we must expose the hypocrisy of those on the Conservative Benches when they now talk about the plight of the working poor.
	I feel strongly about some aspects of the elimination of the 10p rate of income tax, but I do not intend to focus my remarks on that. I should say that I associate myself with the general approach adopted by my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher). He gave the House some specific suggestions on the way forward, and I hope that the Government will consider some of them in the next few days.
	I want to draw attention to the hidden agenda of this Budget. Overall, the Budget is a good one for the vast majority of British people: it supports pensioners, children and families, and it makes the vast majority of British people better off. There is a difficulty with the anomaly of the impact of the abolition of the lower rate on a certain group of people, and I know that many others have discussed that. What this Budget also does, possibly for the first time in 11 years of Labour Budgets, is take seriously the issue of climate change and the environment. Interestingly, although I have not been here for the entire debate I cannot recall a single Conservative Member touching on that issue.
	The Budget of course paves the way for the establishment of five-year carbon budgets. The UK is the first country in the world to adopt that policy. It makes an important commitment that in the third phase of the European Union emissions trading scheme 100 per cent. of permits will be auctioned, which is an enormous improvement on phases one and two; and it recognises that the taxation of aviation has to change from a per person basis to a per plane basis. To their credit, the Opposition have raised that issue over the past year or two, but they chose not to mention it this evening.
	The Budget also takes other important steps forward in respect of transport taxation, particularly the changes to fuel duty and vehicle excise duty, and contains ambitious targets for zero-carbon homes and new buildings. I want to say a word or two in support of fuel duty, because in this House, over many years, fuel duty has been the issue that almost everyone has united against.
	We now need to realise, given not only the urgency of the problem of climate change but the imminence of peak oil, that fuel duty is a sensible, effective, environmentally sustainable and efficient form of taxation. It is socially just, because it impacts least on those who consume the least amount of fuel. It is easy to collect and, in the long term, it will serve to conserve our supplies of fossil fuel, rather than burn them off in a great orgy of consumption.
	I want to put the case for fuel duty, but I do not argue that fuel duty should rise infinitely every year without any changes to other forms of taxation. What is especially good about the Budget is that it balances a slight increase in fuel duty with a significant reduction in income tax. That is the way forward and, for the first time in 11 years, the Government have started to take seriously the important message about shifting the burden of taxation from the bads to the goods, reducing taxation on income and labour and increasing taxation on pollution, and I welcome that. I am just desperately sorry that the official Opposition, who have tried over the past two years to identify themselves opportunistically with the politics of climate change and the environment, are silent on the really important measures in the Budget.
	I welcome the ambitious targets for zero-carbon buildings. All new homes should be zero-carbon by 2016 and all new commercial buildings by 2019. However, we still have the problem that the overwhelming majority of buildings in the country are not new. Most were built decades ago and, in some cases, centuries ago. We have to do more to address the problem of retrofitting those buildings, because they are the source of the most significant proportion of carbon emissions.
	I know that other hon. Members wish to speak, so I shall conclude my remarks. Although the Budget does the right things in terms of climate change and the environment—it takes huge steps forward—the Government need to do more. We have not yet succeeded in properly explaining to the population as a whole the purpose of this historic shift in the basis of taxation away from taxation of labour to taxation of pollution. My final comment is an appeal to my right hon. Friend the Minister—I am sure that she will pass this on to other Treasury Ministers and the Chancellor—to ensure that taxation goes hand in hand with explanation. If the Government do not take more seriously the need to explain to the citizens of the United Kingdom the urgency of the challenge of climate change and the imminence of the threat of peak oil, we will not be successful in building support for the green tax policies that the Government are now successfully pursuing.

Greg Clark: Last night, I received an e-mail from one of my constituents, who said:
	"I am one of the unfortunate people who will be hit by the abolition of the 10 per cent. tax band. I am a single man of 30 years, on a salary of only £13,000 a year working full time as a teaching assistant. I cannot afford to have a home of my own and am still living with my parents. If the Labour Government say they will support or help those hit by this ridiculous fiasco you bet that I will not be one of them as a single man...Please make my comments known in Parliament."
	I am delighted to have the chance to do that, because my constituent is representative of a number of people in my constituency who have been in contact with me, and of others across the country.
	It is extraordinary that in his final Budget as Chancellor, the Prime Minister, having cast around for people to raid for revenue, should have alighted on the least well-off who are employed. He has always said, and asked us to believe, that work is the best way out of poverty. What kind of message does it send when those who are targeted are precisely those who are in work but who are earning the least possible amount? Is that a wholesale reversal of his mantra over the years?
	There is an almost grotesque irony in the fact that the group hit hardest by the increase in tax are people on the Government's official poverty line. The amount at which a single person will be hit is £149 a week; £145 a week is the official poverty line for a single man. The Government have targeted those on the poverty line to raise revenue. Of course we can argue about whom we can best help when distributing the Treasury's occasional largesse, but for people in the Treasury to have a discussion about which people should be tackled and hit hardest, and come up with the answer that it is low paid people on the poverty line, is so extraordinary that it beggars belief.
	On how the issue can be resolved, of course the review that has been mentioned will no doubt involve discussion of tax credits and the question of how we can put more money into child tax credits. However, as my constituent made clear in his e-mail, there are people across the country in deep poverty who do not have children. Their poverty should be our concern, just as other people's poverty is. Child poverty is to be tackled, but adult poverty is booming. Severe poverty—people on incomes of less than 40 per cent. of the median across the economy—has hit a 30-year record under this Government, and is increasing all the time. Surely our aim should be to rescue them from poverty, as well as to tackle child poverty. We should not get into a situation in which we can take adults out of poverty only by making them dependent on their children. That is not right, and it is not a sustainable way forward.

Greg Clark: The hon. Gentleman's constituents in Luton will be delighted that he has chosen a debate on a practical matter, about which I am sure they have written to him, to rehearse tired arguments that are 20 and 30 years old rather than deal with the problem in hand.
	I suggest that we deal with the problem in hand. Ministers on the Treasury Bench should give some indication of how they intend to get out of the mess that they have got into. They should not pretend that there are no means available to do that. The calamitous Budget that resulted in this situation had implications for charities too; I should say that I am a Front-Bench spokesman on charities. Charities were caught up in the issue of whether the circumstances were unforeseen or, as my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) said in his masterful speech, the result of a rather more cunning enterprise—to raise revenue without disclosing its source.
	Charities found that they would be paying £70 million a year, given the reduction in gift aid coming from the reduction in the basic rate. The then Chancellor kept quiet about that in his Budget speech, but in this year's Budget the Chancellor came forward with a package of £285 million to relieve charities for a limited, three-year period. The Treasury was exercised and busy in trying to find a way to get charities out of the mess that it had created for them, but what was wrong with the low paid? Why could the Treasury not give them the thought and attention that it gave charities? Why have the Chancellor and Prime Minister said that they will start thinking about that now? Why did they not do that before the most recent Budget? Why do we have to wait for the pre-Budget report and the Budget after that?
	I am conscious that time is short. It is lamentable that the Government have chosen to hit our pensioners, and the very people whom we want to encourage into work and give the best start, with this doubling of tax. If that was a mistake, the Government should admit it; if it was deliberate, they should recant it. I hope that on Monday practical steps will be taken immediately to address the serious problem that faces my constituents and others around the country.

Mark Hoban: This has been an important debate. Before I turn to the substance of my remarks, I want to comment on some of the speeches made by right hon. and hon. Members on both sides of the House. The Chairman of the Treasury Committee offered an olive branch to the Government, but the Chief Secretary to the Treasury seemed to bat it away by suggesting that the Committee, rather than the Treasury, might look at the number of losers from the abolition of the 10p tax rate. The Chairman also highlighted the risk that the changes in the rules on non-doms will create a culture of non-compliance among those on low incomes.
	The hon. Member for Taunton (Mr. Browne) spoke for 32 minutes. It was a speech long on style, short on substance and composed almost entirely of extracts from other people's speeches and articles—and one joke, which badly misfired. The hon. Member for Middlesbrough (Sir Stuart Bell) spoke about the net losers from the tax changes. He doubted whether 5.3 million people were affected, but as the Financial Secretary knows from her own parliamentary questions, 5.3 million households are net losers from the scrapping of the 10p rate.
	In a characteristically forensic speech, my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) threw out a challenge to the Labour Benches. He came up with his own analysis of why the former Chancellor might have decided in his final Budget to scrap the 10p rate. Labour Members could not come up with their own explanation for why he might have done that.

Lynne Jones: In fact, I addressed that issue in my speech on Budget day 2007; I suggest that the hon. Gentleman reads it. He is concerned about those who have lost out, as was the hon. Member for Tunbridge Wells (Greg Clark), who looked for practical measures to help them. Yet the hon. Gentlemen did not support the amendment tabled last year by my right hon. Friend the Member for Birkenhead (Mr. Field). Earlier, the shadow Chief Secretary misrepresented—

Ian Austin: I am very grateful to the hon. Gentleman for giving way. Instead of the pathetic, schoolboy, debating society wisecracks we got from the shadow Chief Secretary, can he tell us why anyone should take seriously his party's new-found concern for the poor, when its top priorities for tax reform are dealing with inheritance tax, to give a big tax cut to millionaires such as the shadow Chancellor and the Leader of the Opposition, and the abolition of stamp duty on shares for hard-pressed millionaire city traders? At the same time, will the hon. Gentleman tell us how he voted on the minimum wage, the introduction of tax credits—

Mark Hoban: I gave the Prime Minister's PPS the opportunity to speak—I think he is the first Prime Minister's PPS to speak in a debate in this House and refer back to his crib sheet, which he also had to refer to earlier. Let me remind him of the centrepiece of the pre-Budget report in October: a change in the rules on inheritance tax. We will not take any lessons from him on these matters. Of course, the hon. Gentleman is part of the problem: the constant listing of briefings and changes of mind. The Exchequer Secretary said, "Watch this space" on Friday. The Chief Secretary was on the airwaves on Saturday, trying to pretend that nothing was going to change.
	Today, we have a new line—the "jam tomorrow" line. The argument is: "We don't have the time to sort this crisis out before Monday. Just wait till the pre-Budget report and we will sort it all out then." But this is not a problem that has suddenly emerged in the past few days. No one can pretend that this crisis came as a surprise. The Prime Minister and the Treasury knew last year that a net 5.3 million households would be worse off as a consequence of the abolition of the 10p rate. In fact, the Exchequer Secretary herself was signatory to a Treasury Committee report of last year that was highly critical of the decision to scrap the 10p rate—it cropped up during our debates on the Budget and the Finance Bill last year.
	The Government have had plenty of time to put together a package to soften the blow on the losers. Let us not forget how quickly the Government can move when they want to. They quickly backtracked on non-doms, and let us remember how quickly they reversed their position on inheritance tax, after facing pressure from business. Why is it that the 5.3 million households who have lost out have to wait until the PBR? Why do they have to wait when the Government can move so quickly if they want to?
	Of course, why should the people affected believe that there will be jam tomorrow? As the Institute for Fiscal Studies points out, the number of childless, working age adults in poverty has increased by half a million since 1997. They are not going to listen to the promises, hints and suggestions made by the Treasury and the Prime Minister. They want prompt action, and I suggest that Labour Members hold their Ministers to account on the matter, because the pressure put on the Treasury during the past few weeks has clearly started to create movement.

Mark Hoban: I would have expected the hon. Gentleman, for whom I have a great deal of respect, to come up with a better intervention than that. If this problem has been around for so long, why have the Government not responded? Why have they not listened to Labour Back Benchers? Why have they not listened to the Parliamentary Private Secretaries who have been writing letters to complain about it? The Government did not budge on a single thing about it until they realised that they had a large-scale rebellion on their hands, and if Labour Members want to put pressure on the Government to get prompt action, they should continue to push the Government to change their mind.
	There are many other measures that we could discuss, including the small companies rate; changes to capital gains tax; non-doms; raising taxes for families; putting a green gloss on the Budget; and using an attack on binge drinking to increase taxes on alcohol. However, the challenge for the Government is scrapping the 10p rate, to which there is widespread opposition. We heard that tonight, not only from the Opposition Benches, but from Labour Members.
	Last year, the Government put together a package to ensure that people over 65 or those with young children would not lose out by scrapping the 10p rate. However, that left 5.3 million households losing out, including those who have retired early, young people on low incomes who do not qualify for tax credits, and those who are over 25 and on low incomes, but have no children and do not claim tax credits. The challenge that the Chancellor faces is whether he can help those 5.3 million households this year. Can he act to remedy the unfairness of last year's Budget in the Bill? As Labour Members know, the Government have no excuse not to act. The problem is not new; they have known about it for a year and they can act quickly when they wish. They can back down just as they did when they compromised on non-doms, retreated on capital gains tax and reversed their policy of reducing taxes on small companies.
	The Government should do the right thing for families and businesses in times of economic uncertainty, when they are finding it harder to meet ever-higher costs, including increased fuel prices and council taxes. By opposing the Bill, we tell businesses and families that we are on their side; the Government are on their backs.

Jane Kennedy: It is a pleasure to bring to a close the Second Reading on this year's Finance Bill, and I thank all hon. Members who have contributed. My right hon. Friend the Chief Secretary gave a forthright presentation of the benefits of the Bill, and I compliment the hon. Members for Runnymede and Weybridge (Mr. Hammond) and for Taunton (Mr. Browne) on their robust presentations of their parties' positions. I welcome the speeches of all those, especially Conservative Members, who expressed a keen interest in the poor and the impact, as they perceive it, of the Budget on some poor people in Britain. It is one of the Government's successes that we have turned the agenda around so that poverty is now at the centre of debate. I welcome that.
	As one would expect with such a wide-ranging Bill, several points have been made and I would like to respond to as many as possible, within the constraints of time. However, before dealing with those points, I would like to address the changes that the Bill makes to income tax and restate the context in which the debate takes place.
	The introduction of the starting rate of income tax in 1999 was an important step in providing incentives for people to work, along with the reduction in the basic rate of tax to 22 per cent. and a set of changes that took 900,000 low paid workers out of paying national insurance contributions. However, the 10p rate is a poorly targeted way of helping people on low incomes. It benefits the very highest earners, but not the very lowest earners, who pay no tax. Since 1999, we have been developing a far more targeted way of making work pay for people on low incomes, and of providing them with support.
	Our tax credits system—the working tax credit and the child tax credit—now supports 6 million families across the country. The changes to income tax in the Bill have to be seen as part of a package that puts additional resources into those tax credits. The child element of the child tax credit has been increased by £150 a year above inflation this month, and the income threshold up to which working tax credit is received in full has increased by £1,200.

Jane Kennedy: I will give way in just one moment.
	We have of course carefully considered the impacts of the package. It was I who gave my right hon. Friend the Member for Birkenhead (Mr. Field) a detailed answer on 18 October about those who gained and those who lost as a result of the overall package. I acknowledge that some of those people are in households in receipt of low incomes— [ Interruption. ] Yes, some of them. We are acutely conscious of the possible impact on the low paid. We have of course considered ways of compensating those groups. However, that would not only be difficult to achieve, but be disproportionately expensive in many cases. We cannot target—

Graham Stuart: I am extremely grateful to the Minister, who was partly gracious in her answer. It is not empty vessels bouncing up in the Chamber, but the empty promises of the Labour party that is most concerning my constituents. What policies and funding need to be put in place to meet the Government's target of halving child poverty by 2010-11? Are those policies in place and will she ensure that that commitment is met, or is the Treasury Committee right that the Government have lost their wholehearted commitment to reducing child poverty?

Jane Kennedy: If the hon. Gentleman is as committed to eradicating poverty as he claims, I would have hoped that he would acknowledge the steps that we took in the Budget to lift the families of a further 200,000 children above the poverty line. Our approach to the Finance Bill and the Budget has been carefully constructed precisely to enable us to make that progress in tackling child poverty, which his party was responsible for more than doubling when they were in power in the 1980s and 1990s.
	If we were to amend the criteria for tax credits, for example, to make more people eligible, we would also reduce their effectiveness in specifically targeting those at the greatest risk of poverty, such as low-income families with children. Again, those changes would also be expensive.
	My right hon. Friend the Member for West Dunbartonshire (John McFall) not only spoke on his own behalf, but drew attention to the Treasury Committee's report. I should like to quote something that he said in an interview:
	"While tax simplification is a laudable aim, it seems strange that the abolition of the 10 pence starting rate of income tax disadvantages mainly low income households. As such, the Government must ensure that these people are identified, and appropriate help given to them to ensure they receive the benefits to which they are entitled."
	I welcome what he said earlier, as well as any contribution that he and his Committee might make to the process. I completely take his point about ensuring that we work harder to ensure that those who are entitled to, for example, the benefits of tax credits, and working tax credits in particular, receive the entitlements that they deserve. It may well be that many people who fear that they will lose as a result of the proposed change would not be in that position if they were claiming the working tax credits to which they are entitled.
	My hon. Friend the Member for Barnsley, Central (Mr. Illsley) and others said that we could not wait until the pre-Budget report, but nor can we unpick the tax package without unravelling its benefits.
	The hon. Member for Tiverton and Honiton (Angela Browning) and others mentioned pensioners who have taken early retirement. I want to say a word about those in the 60 to 65 age group. About a third of the women in that age group who are affected will be in two-earner households. It is therefore not true to say—as the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) did, in what I acknowledge was a powerful speech, from an opposition point of view—that 5.3 million of our poorest families will see their taxes double. That is how he and his colleagues characterise the situation, but it is not true. The make-up of those who will, overall, pay a relatively small increase in taxes is diverse, and that is why it is difficult to say exactly who they are, and why it is difficult to devise a set of measures to ameliorate the effect of the changes.
	Overall, this is a package that provides targeted support to the families and pensioners who need it most— [ Interruption. ] Hon. Members do not have to shout and bawl. I am under enormous time pressure.

Geoffrey Clifton-Brown: May I thank you, Madam Deputy Speaker, and Mr. Speaker for allowing me to bring this matter before the House today? I also thank the Minister for being present to respond to my comments—I have given him good warning of what I will say—and my neighbour and good friend, my hon. Friend the Member for Tewkesbury (Mr. Robertson), for being here to support me.
	As I am sure the Minister is aware, this is not the first time that I have spoken in such a debate on this issue, which has unfortunately been going on since 1994 and progress on which is about as slow-moving as the traffic on the road. If the Cotswolds had not just been hit by 12 post office closures, I would happily describe this as the biggest constituency issue I have faced in my time as a Member of Parliament.
	I would like briefly to describe the problem. The A417/419 leaves the M4 at junction 15, bypasses Swindon, Cirencester and Gloucester, and joins the M5 at junction 11A. In other words, it is the apex of the triangle that joins the M4 and M5 so that traffic travelling between Swindon and Gloucester does not have to go all the way round two sides of the triangle via Bristol, thus saving 40 miles. The so-called missing link is the three and half miles in the middle that is the single carriageway between the two junctions. Therefore, this problem clearly has national, regional and county-level significance.
	In 1994, I stood with the then transport Minister, John Watts, at the opening of the Brockworth bypass on this stretch of road. With both the Swindon and Gloucester ends of the road having been built, and with £150 million having been spent—then a huge sum of money—it was confidently predicted that this missing link would be built. Unfortunately, however, matters have not progressed.
	Wrangling has occurred ever since over various possible solutions, one of which was the suggestion of a tunnel, which I believe has now been rejected even by most of its ardent supporters, given the physical and financial logistics stacked against it. Instead, in 2004 the Highways Agency presented a £150-million surface project, the so-called brown route, about which my hon. Friend will be well aware as he and I have attended meetings with the Highways Agency to discuss it.
	Following the 2004 publication by the Highways Agency, Gloucestershire county council consulted the community on the available options. At that time, 67 per cent. of the population and 90 per cent. of the business community were in favour of the brown route. Despite that, the scheme did not receive regional prioritisation. I believe that if a similar poll were carried out today there would be an even higher level of support from the local population, and certainly from the business community, because the Gloucester business park is expanding at one of the fastest rates in the country, and housing in both Swindon and Gloucester is expanding at a huge rate. Indeed, all the authorities now support the building of the missing link—the county, district and parish councils—as do five Gloucestershire Members of Parliament.
	As the House may be aware, on 11 October 2006 I had an Adjournment debate on this subject, during which the then Minister with responsibility for transport, the hon. Member for South Thanet (Dr. Ladyman), undertook to ask his Department to instruct the Highways Agency to search for and consider the best available surface option. It is on the back of its excellent and detailed report, published in March this year, that I have called today's debate, in order to see how we can take this matter forward.
	The Minister, whom I am grateful to see in his place today, will be aware that during the last Adjournment debate, I pointed out that the south-west region adjoins three other regions. In this respect, the situation is unique. In considering these very big regions, we should remember that this scheme is only 14.5 miles from the Welsh region border, 6.5 miles from the south-east region border and 11.2 miles from the west midlands region border. It is therefore very close to four regions in total, and it is this factor that causes a weakness in the regional transport prioritisation for delivering road schemes. This is a problem, given that the south-west region is so large. Chipping Campden and the constituency of my hon. Friend the Member for Tewkesbury are closer to the border of Scotland than they are to Land's End, at the south-western tip of the south-west region. That demonstrates how big the south-west region is.
	This scheme will benefit the south-west, as the current bottleneck at the top of the region affects the growth and prosperity of the whole region. However, the critical point of this whole debate is that, because the scheme benefits four regions, it becomes no one region's priority. Under a system in which roads are delivered only if they can achieve regional priority, this scheme will never be delivered unless we have some form of national priority.
	During my Adjournment debate in October 2006, the then Minister with responsibility for transport stated the following regarding the regional funding allocation process:
	"I acknowledge that there were problems, some of which related to schemes on the edge of regions that might not seem of such central importance to the region. Sometimes a scheme might be located in one region but its importance might be to another, so it is not given priority."—[ Official Report, Westminster Hall, 11 October 2006; Vol. 450, c. 102WH.]
	He went on to confirm that two schemes were put to him: the A417 and the M5. He gave the M5 national priority, while the A417 and the missing link were given regional priority. He conceded in the debate that he might have got that decision wrong, and that he would reflect on it.
	Perhaps now is a suitable time to explain exactly why I have campaigned so long and hard for this improvement to be made. The missing link is the only section of single-lane road in a dual carriageway that runs from Palermo in Sicily up to Perth in Scotland. One need only scan briefly the 2008 review from the Highways Agency to understand the significance of this road economically and environmentally, but surely most importantly on the ground of safety.
	For those of my constituents and those of my hon. Friend who are forced to use the road regularly, I am afraid that the facts are frightening. More than 30 deaths or serious injuries have occurred in the past decade; tragically, the most recent death was just last month. Speaking following this fatality, Inspector Dave Collicott of the county's road policing unit told the local media that
	"the likelihood of this collision would have been reduced had this section been to the same standard as those on either side of it".
	Accidents happen with unfailing regularity. The really significant point is that this section of road has an accident rate 30 per cent. higher than the national average. The Minister will note from the report that "107 personal injury accidents" were
	"recorded over the 5 year period to October 2007, a 6 per cent. rise compared with 3 years ago".
	Sadly, despite an awareness of those safety concerns, the road is the only viable option for most.
	The Highways Agency goes on to say:
	"The route is also vitally important to the regional economy in providing direct links to and between Swindon, Gloucester and Cheltenham, where there is significant development. It is therefore the most appropriate route for all traffic between these two centres".
	People certainly use the road; between 28,000 and 34,000 vehicles a day are forced to tackle this bottleneck. At the best of times, that can cause traffic jams as cars sit stationary with fumes pumping from their exhausts. Breakdowns can cause huge congestion problems, particularly as heavy goods vehicles often struggle up the steep incline at Crickley hill, in the constituency of my hon. Friend, break down and cause even more congestion as they do so.
	Since the problem has been highlighted, minor improvements have been made to the road. However, the fundamental fact is that 10 years of inactivity on the matter has seen four deaths, 31 serious injuries and 211 minor injuries, alongside countless hours lost to traffic jams and the sheer volume of carbon monoxide emissions from stationary vehicles.

Laurence Robertson: I congratulate my hon. Friend on, yet again, introducing this matter for debate. He will doubtless have noticed that the road, as it comes towards my constituency, does not just clog up at rush hour, as perhaps it once did; even at mid-afternoon it is not unusual to see a very long tailback. The inadequacy of the rail travel between here and my constituency, and between Cheltenham and Gloucester, makes the matter even worse. We do not have a good transport system to our constituencies.

Geoffrey Clifton-Brown: My hon. Friend makes a really good point. I believe that he made it in our previous debate in 2006. This really important road improvement is needed for the growth and prosperity of not only our region, but of the adjoining regions. As he says, it is not as if we have a really good rail system. Given the size of Gloucester and Cheltenham, and their distance from London—less than 100 miles—we are talking about some of the worst rail transport in the country. This important piece of infrastructure needs to be completed.
	I have not been alone in my fight to get the necessary changes made; Gloucestershire county council has also been highly vocal on the matter. My hon. Friend will be aware that Peter Bungard, its chief executive, is sending an open letter to the Minister regarding this matter and the work done by the council as it has dragged on, and I hope the Minister will give that letter due attention.
	I am aware that a number of challenges are presented by this stretch of road. First, the A417 runs through the Cotswolds area of outstanding natural beauty, so any proposals need to be highly sensitive to mitigate the effects. I welcome the view of the Highways Agency in its excellent report that
	"this constraint must be fully considered in any proposed scheme".
	However, it must also be noted that the long tailbacks, to which my hon. Friend referred, do not contribute greatly to the beauty of the area.
	Secondly, the topography of the area is a challenge to road builders and makes the section at Nettleton Bottom and the Air Balloon so dangerous. Even with those considerations in mind, the Highways Agency has produced a preferred solution—still described as the brown route—that is almost identical in nature to the one it found in 2004. The cost, with inflation taken into account, is inevitably much the same. The Highways Agency states that the proposal is
	"highly developed and has captured virtually all the available savings for a major improvement giving long term service, reliability and resilience."
	I hope that when those in the south-west region consider their road schemes, they will acknowledge the amount of work that has been done and the fact that the Highways Agency has examined the matter in huge depth, has taken into account all local alternatives and has still come back with its preferred brown route, which is identical to the one that it came up with in 2004.
	In the Adjournment debate of 2006, I commented that the Highways Agency was uncomfortable with the road remaining a single lane. In response, the then Minister of State, the hon. Member for South Thanet, stated in respect of the status quo:
	"I have no hesitation in confirming that both it and the Government are uncomfortable."
	About the proposals that existed in 2004, he said:
	"For the first time, importantly, the Highways Agency had a major scheme design, and the Countryside Agency, the Environment Agency, English Nature and English Heritage were all content to see it proceed to the next stage: entry into the targeted programme of improvements.
	In my experience, it was probably the first time in national history that anyone had managed to get those four agencies to agree on such a sensitive matter".—[ Official Report, Westminster Hall, 11 October 2006; Vol. 450, c. 100-01WH.]
	That is surely of great importance, given the environmental concerns that were posited beforehand.
	I shall conclude on the facts of the case for the Minister. The A417 has an accident rate 30 per cent. higher than the national level. It is bedevilled by congestion and traffic levels are growing. Support for the improvements is widespread across the county and in neighbouring regions. Failure to begin improvements has made the Government uncomfortable, as was said in the previous debate. Five key agencies—I have just listed them—support the scheme. The road is a vital economic gateway nationally, regionally and locally. The solution proposed this year in the comprehensive review is similar to the one proposed in 2004. To my mind that is a clear indication that the best solution is now on the table, as proposed by the Highways Agency.
	I would like to leave this debate having received an assurance from the Minister that essential improvements to the missing link will begin in earnest. Perhaps the Minister can confirm that due consideration will be given to making it a national priority. For even beginning work tomorrow will be too late, because the scheme will take many years to complete. If correct prioritisation had been given, we could be well on the way to a solution. Too many people have died or been seriously injured, and the economic fortunes of the nation and the Gloucestershire region are being restricted by that three and a half mile stretch of single road. I hope that the Minister will be able to give us some good news this evening.

Tom Harris: I congratulate the hon. Member for Cotswold (Mr. Clifton-Brown) on securing this second Adjournment debate in 18 months on what he refers to as the missing link on the A417 near Gloucester. I thank him for his constructive engagement with and his commitment to this campaign, which is important to his constituents and to the wider region. I will return to the issue of national importance later in my speech.
	Since the last Adjournment debate on this issue 18 months ago, the Highways Agency has undertaken a wide-ranging and thorough review of possible improvement options to address the existing conditions on the Cowley to Brockworth section of the A417. The report that I sent to the hon. Gentleman and his colleagues the hon. Members for Tewkesbury (Mr. Robertson) and for Forest of Dean (Mr. Harper) on 12 March details the work undertaken and conclusions reached during this review. The hon. Member for Cotswold alluded to that report.
	The review carried out by the Highways Agency has left no stone unturned in an effort to identify whether a more affordable option can be found to improve the existing conditions on this section of the A417. The hon. Gentleman will be aware that the views of key stakeholders have been an important part of the information gathering during the review. Indeed, I know that he gave his own helpful and supportive views personally to the Highways Agency as part of the value management stakeholder workshop in March 2007.
	The value management exercise was very useful. It enabled the agency to identify various options put forward by stakeholders that might contribute to a more affordable scheme and then rank them to establish which elements would be worth considering further. Each of the worthy options was then assessed to identify the impact that they would have on safety and journey time reliability, and then compared with the improvement achieved by the major scheme. This review has confirmed that the major scheme already developed by the Highways Agency would capture virtually all the available benefits, provide optimum value for money and be a long-term solution. As the hon. Gentleman rightly points out, following an extensive review we have returned to the original proposal.
	The hon. Gentleman pointed out the increase in costs of the major scheme. I know that he is acutely aware of the issue. It is why the region requested in 2005 that the Highways Agency carry out a review to examine the possibility of a lower cost solution. Since that last debate the costs have increased from £150 million to £250 million, and that rise is of such an order that it would be entirely appropriate to offer some explanation of why the figures have changed so much.
	There are three reasons. First, construction inflation has been far higher than was previously predicted. Secondly, a later date has been assumed for a possible start date. Thirdly, estimates include the historic costs spent on the scheme. As it turned out, construction inflation between 2001 and 2006 was higher than predicted and added some £50 million to the cost. In addition, delaying the scheme to beyond 2013 takes it beyond the construction period for the Olympics, when inflation is expected to be even higher. In fact, inflation for the period adds about £45 million to the cost. I understand simply that the major construction scheme is taking place at the same time as construction on the Olympics and resources and materials will be available only at a premium.
	The increases led us to look at other ways to reduce the cost of the major scheme. One would be to build the scheme in a number of phases, spreading the cost over a number of years. However, that increases the costs by at least a further £30 million—13 per cent. of the total. It would also extend the period of construction, which would inevitably cause additional congestion during the construction phase. On balance, there is no doubt that it would be better to build the whole scheme under one contract.
	In a world of finite resources, we must ensure that our transport investment is focused on the most important schemes. That is why in July 2005 we invited the south-west region to give us advice on transport priorities with an indicative funding allocation for major schemes in the south-west. The regional funding allocation, or RFA, process has, for the first time, given regions a say in making decisions about transport schemes that affect them. The RFA process is an opportunity for people in the region to work together to develop a realistic, prioritised and affordable transport investment programme to support the region's high-level objectives for jobs, the economy, housing and the environment. It is central to our thinking that the regions are better placed than the men and women of Whitehall to advise decision makers on how transport can help to make the regions even better places.
	We backed the RFA process with massively increased investment funding. We have increased our annual spending on such schemes by 50 per cent. since 2001-02. For example, the Highways Agency has invested £16 million improving the Commonhead junction on the A419 in Swindon. The agency is also spending £65 million to provide a much needed bypass for Blunsdon on the same route.
	We intend to provide almost £865 million over the next 10 years for regionally significant transport schemes in the south-west. However, the hon. Gentleman and others have suggested that we are not making enough money available in the south-west.
	I shall interrupt my flow at this point to reassure the hon. Gentleman and the hon. Member for Tewkesbury that I understand absolutely that when a constituency MP is dealing with the horrific aftermath and tragedy of people being killed on a local road it makes little difference, particularly to the families, for a Government Minister to talk about the record amounts of money being invested in road schemes elsewhere in that region. I am aware of the importance of providing safe roads in the region represented by the hon. Member for Cotswold and in other parts of the country. That does not detract from the fact that we are spending record amounts of money. I fully understand the hon. Gentleman's personal concerns about the accident record on that stretch of road, which are in no way obviated by the levels of investment.

Geoffrey Clifton-Brown: Let me try just one more time. This is not an issue of funding, but of process. If a scheme is on the edge of four regions, and will benefit all four, not one region will give it priority. The scheme will never be delivered unless the Minister, working on a national basis, advises the four regions that all of them want the scheme. There must be a system of second preferences, as it were, otherwise the south-west region will never regard the road as a priority.